With growing awareness of ESG (Environmental, Social, and Governance) criteria, ethical funds are gaining traction. Ethical funds aim to align investment portfolios with principles that prioritize sustainability, integrity, and societal well-being.
Investors today seek more than financial returns-they want their investments to reflect their personal beliefs. Ethical funds cater to those who prioritize environmental sustainability, non-violence, or religious principles (e.g., Shariah or Jainism), creating a strong emotional connection.
For curious investors, these funds are an opportunity to align wealth creation with positive societal impact. This NFO provides an opportunity to invest in companies across industries that follow ethical values, this represents a growing trend of integrating social responsibility into financial decisions.
(Source: Scheme Information Document)
What will be the investment strategy for Quantum Ethical Fund?
Quantum Ethical Fund will follow an active investment strategy. The corpus of the scheme will invest in share of companies meeting an Ethical set of Principles including of Shariah, Jainism and other ethical principles encompassing a broad Ethical Framework. Such companies meeting the ethical criteria will be further screened through Quantum's proprietary integrity framework.
These companies will also undergo a financial evaluation based on a set of metrics to ensure they are financially sound before being included in the portfolio.
Shariah & Jainism Principles in Ethical Investing
Shariah principles emphasize fairness, equity, and risk-sharing in financial transactions, prohibiting interest, excessive speculation, gambling, and investments in industries like alcohol, tobacco, gambling, and harmful businesses.
Similarly, Jainism principles prioritize sincerity, integrity, and non-violence (Ahimsa), encouraging minimal consumption and excluding sectors like meat, animal products, alcohol, tobacco, animal-tested pharmaceuticals, weapons, and gambling.
Both approaches align with ethical investing by promoting responsible and socially conscious investment practices.
(Source: Quantum Ethical Fund )
The investment strategy of the Scheme will be to invest in a basket of stocks after intensive analysis on the integrity aspects of the company. The companies will also be evaluated on various financial aspects to ensure it's on a sound footing further reducing financial risk with such investments.
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How will the scheme allocate its assets?
Under normal circumstances, Quantum Ethical Fund will hold an allocation of 80% to 100% in Equity & Equity related instruments of Companies following an Ethical set of Principles and 0% to 20% in Debt & Money Market Instruments in compliant with Ethical Principles.
Should investments in Quantum Ethical Fund be considered?
Quantum Ethical Fund invests based on ethical principles, avoiding sectors such as alcohol, gambling, tobacco, and others deemed harmful or socially unacceptable. This approach resonates with investors seeking to make a positive societal impact through their investments.
Quantum Ethical Fund could be considered if you are inclined towards ethical investing and aligning your portfolio with socially responsible principles.
However, do note, ethical funds often avoid high-growth sectors that conflict with their principles, which may result in a more conservative growth trajectory compared to other funds. These funds may demonstrate resilience during market downturns by focusing on fundamentally strong and socially conscious businesses. However, they might also underperform during market rallies due to sectoral exclusions.
Although the scheme offers a focus on companies adhering to ethical standards often correlates with good corporate governance & sustainable practices, investors should be aware of the risks associated with it. The performance of the scheme might therefore be impacted by certain variables, among others, and may affect negatively if any of the underlying sector moves out of favour.