India has fewer funds focused on environmental, social and governance (ESG) issues than other top 10 economies, data shows, amid investor caution about ESG funds that have yet to build a track record in India’s market.The world’s sixth largest economy has 23 ESG funds, Refinitiv data shows, compared to the United States and Britain with more than 500 each, while Japan has 182 and China has 119. Other economies in the top 10 also have more ESG funds.
Analysts said investors were reluctant to put cash into ESG funds as most funds in the sector were new and could not show a track record of outperformance.”Institutional investors and distribution partners often have policies in place that do not allow them to invest in funds which are less than three, or in some cases five, years in the market,” said Chaitanya Kalia, a partner at EY India.”The idea is to track the performance and consistency before investing,” Kalia said.
Indian ESG funds have faced outflows in 12 of the last 14 months, Morningstar data shows. In contrast, inflows into equity mutual funds hit a record high of ₹22,583 crore in July, the Association of Mutual Funds data shows.
