Integration of ESG Investment With the Traditional Portfolio- a Study of TATA Mutual Funds

Abstract

With environmental, social and governance issues taking prominence at national and global level , the investment strategy known as ‘Sustainable Investment’ has been gaining popularity worldwide. Also named as Ethical Investing, ESG investing, Socially Responsible Investing (SRI), Impact Investing, High-Road investing, it has been there around for a long time, first recorded instance dating back to 18th century. With various misconceptions, the concept has been ignored for a long time but the debacle of giant financial entities, global financial crisis and failure of entities in terms of considering environmental, social and governance issues led to the rejuvenation for the concept. From the traditional investment strategy to present ethical investment strategy, the biggest shift in recent years has been the increasing dominance of the sustainable approach known as environmental, social and governance risk management. Traditional portfolio strategy is being integrated with ESG investment is the contemporary issue in capital markets. Ethical Investment has been gaining momentum in Indian capital market where as ESG investment is at its infancy level. Mutual funds in India have made an attempt to offer ethical investment opportunity for its investor by introducing few ethical funds. Present study makes an attempt to evaluate the performance of selected ethical funds of TATA Mutual funds and applies portfolio evaluation techniques besides standard risk return techniques.