Conservative investors with long-term goals may opt for ESG funds

Their recent underperformance vis-a-vis multi- and flexi-cap funds was due to predominantly large-cap exposure

Though the Environmental, Social, and Governance (ESG) fund category has given a reasonably decent category average return of 32.4 per cent for the year ended February 28, 2024, it has underperformed diversified equity categories. Flexicap schemes have given 36.9 per cent while multicap schemes have given 44.7 per cent over the same period. Should investors avoid these funds after this recent spell of underperformance?

As of January 3, 2024, 10 ESG schemes across various fund houses were managing assets worth Rs 10,946 crore. One of these schemes — Mirae Asset Nifty100 ESG Sector Leaders Exchange Traded Fund (ETF) — is passively