Kotak Mutual Fund has launched a thematic fund focused on theÂ Environment, Social and Governance (ESG)Â space named Kotak ESG Opportunities Fund. The new fund offer (NFO) has opened on November 20 and will close on December 4.Â
An ESG investment focuses on companies doing business adhering to the ESG norms. Kotak AMC has been at the forefront of ESG investing. It is the first Indian asset management company to sign UNPRI – United Nations’ Principles for Responsible Investment. Signing the internationally-recognised Principles for Responsible Investment allows an organisation to publicly demonstrate its commitment to including ESG factors in investment decision making and ownership.
Around 40-60 top stock ideas based on ESG score and Kotak AMC’s proprietary Business, Management & Valuation (BMV) approach will be selected. The ESG parameter based filter will lead to preference to companies/stocks with higher ESG.
Also, Kotak ESG Opportunities Fund will importantly have moderate to high mid & smallcap exposure. This is different from the low to moderate exposure by funds like Kotak Standard Multicap Fund.
Fund manager – Harsha Upadhyaya (President & CIO- Equity, Kotak AMC)
Minimum investment during NFO – Rs 5,000
Minimum SIP purchase – Rs 1000
Plans – Regular Plan and Direct Plan
Options – Growth, Dividend Payout and Dividend Re-investment
Exit load – 1% for redemptions / switch outs (including SIP/STP) within 1 year from the date of allotment of units, irrespective of the amount of investment
Fund benchmark – Nifty 100 ESG Index TRI
Historical evidence suggests that companies that prioritize ESG issues have generated better risk-adjusted returns. From an absolute returns perspective, responsible investing oriented portfolios can generate a higher return than plain-vanilla indices of largecap firms.
Though thematic funds are supposed to be high-risk, investors must understand that ESG / Responsible / Sustainable investing oriented funds are relatively safer. These products are a good choice to start off for someone looking at adding thematic funds to their portfolio. But themes should not form a large part of your portfolio. Allocate a small percentage to themes.
If you need help with investing in Kotak ESG Fund NFO, contact the wealth team at Wealthzi.