The fund is an open-ended, multicap scheme which is benchmarked on the Nifty 100 ESG index.
Axis Asset Management Company (AMC) on Monday announced the launch of a new fund that will invest in companies that come under the environment, social and governance (ESG) category through its new fund offer (NFO) Axis ESG Equity Fund.
Explaining the parameters for selecting companies, the AMC said its focus would be on companies that would deliver growth and have strong financials, and then decide how they score on the ESG framework. The fund is an open-ended, multicap scheme which is benchmarked on the Nifty 100 ESG index.
Through the proprietary ESG framework, investment managers will evaluate companies on the basis of whether a firm is heavily polluting or if the its activities harm the society. The AMC will also evaluate companies on the basis of its shareholding pattern, board structure, capital allocation and management quality.
“Ten years back, we used to worry that the ESG will underperform, now we think that ESG is essential to outperform. The new thought globally is that these (ESG) business will outperform if done right,” said Chandresh Kumar Nigam, managing director and chief executive officer, Axis AMC. He explained that the concept of ESG investing has been gaining ground in the developed world for the last five years.
According to Nigam, non-financial factors are becoming an equally important parameter for investing in companies, which is why the AMC wants to focus on sustainability as well as the profitability of any company before investing.