ESG mutual fund NFO launched by Aditya Birla mutual fund


Aditya Birla Sun Life ESG mutual fund is a NFO from the house of Aditya Birla Sun Life Mutual Fund.

It would be an open equity scheme investing in companies following Environment, Social and Governance (ESG) theme.

The fund would be open for subscription from December 4, 2020 to December 18, 2020.

aditya birla mutual fund

NFO details for Aditya Birla Sun Life ESG Mutual Fund

Scheme Opens


Scheme Closes


Fund Manager

Mr. Satyabrata Mohanty

Mr. Vinod Bhat



Fund Category


Exit Load

1% if redeemed before 90 days



Aditya Birla Sun Life ESG Mutual Fund Investment Objectives

The investment objective of this esg mutual fund is to generate long term capital appreciation by investing in companies following Environment, Social and Governance (ESG) theme.

There is no guarantee that the investment objective of the fund would be realized.


Aditya Birla Sun Life ESG Mutual Fund Allocation

The asset allocation for the fund would be something like this

Asset Class

Minimum %

Maximum %

Equity and Equity Related instruments of companies following ESG theme



Equity and Equity Related instruments



Debt & Money market instruments



Units issues by REITS and InvITs




The above figures are only indicative and not fixed, the fund managers have the liberty to move across the asset classes depending upon prevailing market conditions as long as they remain within the mandate permitted.

The fund can also invest in REITs and InvITs if so desired.


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Investment style for Aditya Birla Sun Life ESG Mutual Fund

The fund would be an open ended thematic equity scheme investing in companies following the ESG theme.

The fund would be market cap agnostic with 60-80 % into large cap stocks and the remaining in mid and small cap companies.

The fund can invest in foreign securities up to 35% of the portfolio.

The fund would partner with ESG research provider ‘Sustainalytics’ for ESG scores and ratings.  


Are you investing in the right mutual funds?

What are esg mutual funds?

ESG mutual funds are more concerned with how money is made rather than how much money is made, they are more concerned with a how a business makes profits rather than how profitable the business is.

A ESG mutual fund is not your traditional mutual fund scheme, it views companies from the ESG lens and therefore the parameters and filters for it are not the same as other mutual fund schemes.

ESG mutual funds are built and run on the following three pillars:



The fund reviews and judges a company based on:

  1. Its carbon emissions if any
  2. Its positive contribution to climate change
  3. How efficiently it uses the natural resources
  4. Water and waste management.

The fund does not expect chemical or refinery businesses to all of a sudden stop using water but it does expect such businesses to use water more efficiently and only release effluents into a natural body of water after it has been treated well.



The fund reviews and judges a company based on:

  1. Labour management
  2. How it treats its customers
  3. Diversity at the workplace
  4. Gender diversity
  5. Its positive involvement and contribution to society at large
  6. The stand in takes on social issues

The stand the company takes on socially relevant issues has a big say in whether customers want to see themselves aligned or associated with the company.



The fund reviews and judges a company based on:

  1. Its Whistleblower policy
  2. Bribery and corruption policy
  3. Diversity and composition of its board

Any irregularities with the numbers reported, financial fraud does not show the company in good light. This not only affects the share price of a company but also puts all the stakeholders in a position where they are compelled to review their decision to be associated with a company they feel they cannot trust.  

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ESG Mutual Funds Investing strategy

ESG mutual funds are more concerned with what companies ger right rather than what they get wrong.

The idea is to pick companies that meet certain standards that have a positive impact on the environment in every aspect and thereby a healthy outlook for the company too.

If a company has been fined by the environmental authorities for releasing unfiltered effluents into the waters then it would affect the stock price negatively too.

Other examples would include unfair working conditions and any corruption or bribery charges levied against it.

All these events affect everyone related to the company including the shareholders and overall the environment in every aspect.

ESG mutual funds try to avoid these companies and therefore there is better downside protection which is as important as upward movement in share prices.

Advantages of ESG mutual funds

ESG mutual funds tend to be less stable than other mutual funds since they refrain from investing in companies, they believe are not transparent or run the risk of financial malpractices among other things.

The strong filtering process makes sure the fund only invests in sustainable businesses that provide long term growth while complying with all the necessary standards.

They are more favourable to investors that look for overall growth and not merely on the financial side.



Disadvantages of ESG mutual funds

Because of the stringent filtering process, the fund has a limited universe from where it can pick which companies to invest in and which to avoid.

This makes for a very focused portfolio and thereby the fund does not get the privilege of as much diversification as say other equity mutual funds.

ESG mutual funds cannot be the core portion of your mutual fund portfolio since at the end of the day they are still thematic mutual funds.

These funds may not always work in a bull market since they may have to overlook certain companies and sectors that do not meet the ESG requirements.


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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

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