You may soon get an investment fund option in the ESG (environment social governance) space if you are an investor in Max Life Insurance Company Limited’s Ulip, Max Life Flexi Wealth Advantage Plan, which was launched earlier this month. Max Life has launched Max Life Sustainable Equity Fund linked with the Ulip. A Ulip has both insurance and investment components.
“There is a rapidly evolving customer segment with a bias for investing in ESG funds. As the preference grows, insurers must design products that allow customers to build wealth by investing responsibly,” said Prashant Tripathy, managing director and chief executive officer of Max Life Insurance in a press release.
Here's what the fund is all about and how to invest in it.
Max Life Sustainable Equity Fund is a pure ESG fund. “The Max Life Sustainable Equity Fund responds to the growing demand for responsible investment and will allow customers to invest in firms that maintain appropriate ESG scores,” according to the press release.
This means that it will only invest in those companies which adhere to ESG guidelines and procedures. This is for the first time that an insurance company in India has come out with a focused ESG fund, the company claimed.
Max Life has outlined in the press release that this new actively managed ESG fund will be benchmarked against the Nifty ESG 100 Index. This means that this fund will invest in those companies which are in the ESG index and have a high ESG overall score.
“The ‘Max Life Sustainable Equity Fund’ is a thematic offering that invests in socially responsible companies and evaluates environmental, social and governance standards as part of the investment process,” added Tripathy.
As per data available on NSE, the NSE 100 ESG Index has outperformed the NSE 100 Index. Over a five-year period, the NSE 100 ESG Index gave a compounded annual growth rate (CAGR) of 16 per cent, while the NSE 100 Index gave 13.6 per cent.
“As per market analysis, the Nifty ESG Index has outperformed the Nifty 100 Index for the past five years. Hence, this reflects that companies that are better in governance, are socially responsible, and have environmental consciousness have outperformed others, thus making it imperative to invest in sustainable funds for long-term growth and wealth creation,” said the press release.
Since most ESG mutual funds are new, there is only one mutual fund which has been in existence for the last five years, SBI Magnum ESG fund. As per data from Valueresearchonline.com, this fund had a five-year CAGR of 11.73 per cent.
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