Performance evaluation of select ESG- thematic mutual funds in India

Abstract

Growing awareness of Environmental, social, and governance aspect have impacted the financial market drastically. Investors, while investing, give enough weight to Non-financial factors (Environmental, social, and governance) along with the financial factors (Return, risk, Capital appreciation, etc.), which has led to notable growth in ESG- themed mutual funds globally. Using a variety of risk-adjusted metrics, including Sharpe ratio, Treynor ratio, Sortino measure, and Jensen's alpha, among others, the current study aims to assess the performance of eight mutual funds with an ESG theme in terms of annualized return and risk-adjusted return. A comparison with the benchmark has also been made. Based on the study conducted, ‘Quant ESG Equity’ turns out to be the best among others, with ‘ICICI prudential ESG’ following behind. Other funds show satisfactory results. The study also shows that ESG fund have performed better while comparing with traditional fund. The implication of the study holds significant importance for the investor for better decision-making and assessment towards ESG investments.