NFOs Galore: WhiteOak Capital Launches ESG Fund, But Is It Worth It? | personal finance

“Historically, the Nifty100 ESG TRI has outperformed the Nifty 100 TRI in 11 out of 14 financial years. (Including FYTD 2025). Nifty100 ESG TRI grew 14.6% CAGR vs. 13.7% of Nifty 100 from Apr '11 to Sep '24. Although the CAGR for TRI, Nifty100 ESG TRI has underperformed Nifty 100 TRI over the last 3 years (past performance may or may not persist in the future), said the company in a statement.

“In DCF (discounted cash flow) models, typically more than 80% of the value comes from the terminal value. Projecting future growth and significant exit growth rates, multiples and terminal values ​​presuppose business sustainability and longevity, which one suspects may not come at the cost of environmental damage, ignoring social obligations and deceiving minority shareholders. . Poor ESG practices pose risks to business longevity and therefore reduce terminal value,” said Ashish Somaiya, CEO of WhiteOak Capital Asset Management Limited.

The fund will use its ownership structure to evaluate companies on their corporate governance practices.

“Under this framework, companies are evaluated based on their accounting practices, alignment with minority shareholder interests, capital allocation, board strength and compliance with relevant laws and regulations,” said Ramesh Mantri, CIO at WhiteOak Capital Asset Management .

Based on this assessment, companies are internally ranked from one to twelve, with companies ranked first being the best governed companies and companies ranked twelve being the least well governed.

The scheme will consider companies ranked first to fourth in its ownership structure as its investment universe.

Within the investment universe, the Fund will invest in businesses with characteristics of high return on capital growth, scalable long-term opportunities, strong performance, etc., that are available at an attractive valuation, i.e. underlying value with a substantial discount compared to the current market. price.

As per SEBI guidelines, the scheme will invest only in those securities where the Corporate Responsibility and Sustainability Report (BRSR) is released. The Fund will use SEBI-registered third parties, ESG rating providers for rating reports and other research to assist in the decision-making process.

The scheme will invest at least 65% of its assets under management (AUM) in companies that report comprehensive BRSR and ensure key BRSR disclosure. The remaining AUM of the scheme can be invested in companies with BRSR disclosure.

The fund will be managed by Ramesh Mantri (Equities), Tripti Aggarwal (Assistant Fund Manager, Equity), Dhiresh Pathak (Assistant Fund Manager, Equity) and Piyush Baranwal (Debt).

Who should invest in such NFOs?

“For you – the investor – no fund company needs to have more than five funds. These should be a conservative and adventurous equity fund, a liquid fund, an income fund and an equity fund. Tax on Hybrid Shares and Hybrid Funds – There may be savings variants but the actual names of these five types of funds may vary, but these mutual funds can meet the genuine savings and investment needs of any investor,” Kumar said.

Portfolio allocation:

• The fund portfolio allocation will include equities and equity-related instruments of companies that follow environmental, social and government (ESG) themes, adopting best-in-class strategies: 80%-100%, equities and equity-related instruments of other companies. 0-20%, debt securities and money market instruments.

• 0-20% and units issued by REITs and InvITs.

• As part of the best-in-class strategy, the scheme will invest in companies and issuers that outperform their peers in one or more performance metrics related to ESG issues. The scheme will invest in “other equity instruments and equity-related instruments” in accordance with the best-in-class strategy followed by the scheme.