Today, the variety of Mutual Fund products is expanding, one of which is based on environmental social governance (ESG) principles. The increasing popularity of ESG Mutual Fund products is attributed to the trend of investors focusing more on environmental considerations and the attractive potential returns.
The emergence of the ESG Mutual Fund investment trend is also linked to the global awareness, including in Indonesia, regarding environmental issues. Therefore, this article will provide a detailed explanation of the definition of ESG Mutual Funds, their prospects, and the benefits for investors.
Definition of ESG Mutual Funds and Future Prospects
Essentially, there is no fixed definition of ESG Mutual Funds. The term ESG stands for Environmental, Social, and Governance. In practice, you might be familiar with Sustainable Development Goals (SDGs) widely implemented by companies, industries, and individuals.
Investing in ESG Mutual Funds literally refers to investment activities supported by parties that prioritize sustainable aspects. These parties are related not only to corporate investors but also to individual investors.
According to experts, currently, investors with good wealth management are more inclined to choose ESG Mutual Fund investments. This is driven by the awareness of preserving the environment and making a positive contribution to society.
However, the investment prospects for ESG funds are predicted to become more popular among investors. One of the reasons is the low level of risk, as ESG Mutual Funds also implement good governance aspects contributing positively from various angles.
5 Benefits of Investing in ESG Mutual Funds for Investors
The increasing trend in ESG investments is not only due to the potential benefits for investors. Bloomberg business media predicts that ESG investments will surpass USD 50 trillion by 2025.
Knowing this, you can make informed decisions about choosing the right ESG-based Mutual Fund investments. Here are some benefits of ESG Mutual Fund investments based on information from Republika:
- Outperformance
Be aware that companies with production activities and strategies focused on ESG tend to have better operational efficiency. This is considered as outperformance and can be advantageous for individual investors when choosing investments.
The term 'Outperformance' refers to its profitability exceeding that of typical non-ESG investment products or indices. This is influenced by various factors focusing on sustainable aspects. Therefore, investment products with ESG have a better chance of outperforming over time.
- Positive Contribution to the Environment
As you may be aware, recently the climate has been deteriorating due to human activities. Therefore, fundamentally, any activity must prioritize sustainable values. The benefits of ESG investments not only profit investors but also contribute positively to the environment.
If you choose ESG investments, that decision becomes one of your contributions to environmental conservation.
In Indonesia, there are many suitable types of ESG-based investments. Therefore, as an investor, it is essential for you to be more aware of environmental aspects, starting with your investment choices.
- Ethics-based Risk Management
Another benefit of choosing ESG Mutual Fund products is ethics-based risk management. Even though this aspect may not be immediately apparent, the economy, business, and nature are interconnected.
Ethical risk management can enhance a company's portfolio value, attracting investors interested in sustainable governance and business ethics.
As an investor, investing in companies or products that focus on ESG can reduce investment risks due to stronger and more positive business governance and ethics.
- Social Responsibility to Society
"The most suitable investment is not merely about financial returns. Currently, providing social benefits has also become a trend and priority. It's important to note that the benefits of ESG Mutual Fund investments include making a positive social contribution to society.
Social responsibility involves ensuring the well-being of workers or fostering good relationships between businesses, investors, and the local community around the company's operational location. Therefore, choosing ESG Mutual Fund products can maintain investment value stability and reduce the risk of social aspects.
- Long-term Investment Goals
The final benefit is a better assurance of long-term investment. When investing, you undoubtedly want long-term investments with increasing returns in each period.
According to experts' observations, ESG Mutual Fund investments, which adhere to sustainable principles, are better prepared to face risks and quickly adapt to changes in the financial market.
These benefits make ESG Mutual Fund investments advantageous for investors. It's no wonder that the trend of ESG-based investments is on the rise, presenting an attractive prospect for investors.
ESG-based Investment with DBS Treasures – the Right Partner
DBS Indonesia, through DBS Treasures priority banking, can facilitate Clients in investing in ESG Mutual Funds. Make DBS Treasures your wealth management partner to gain various benefits when investing in ESG. According to Kompas, DBS Treasures offers six types of ESG Mutual Funds.
One example is BNP Paribas Sri Kehati (SRI-KEHATI) available on the digibank by DBS Application, and many others. For those prioritizing sustainability in every activity, including investing, it's time to choose this ESG investment.
The advantage of investing in Mutual Funds with DBS Treasures is reduced investment risk through diversification. Additionally, you will receive insights and information to guide your investments.
Be supported by curated market analysis from a team of financial experts who will communicate it. Seize the latest opportunities that have been tailored to your risk profile and portfolio needs, driven by Artificial Intelligence/Machine Learning (AI-ML). This insight is equipped with curated solutions related to investment (Grow) and insurance (Protect), so you can quickly and confidently invest through your preferred media.
In conclusion, choosing ESG Mutual Fund investments is a trend that investors prioritizing high returns can follow. Lower investment risks are also an advantage if you choose investment products from DBS Treasures. For more information, click here.
