Imperial Study on the Comparative Performance Evaluation of ESG Mutual Funds and Normal Mutual Funds in India

Abstract

Mutual funds are professionally managed investment vehicles that pool money from multiple investors to invest in diversified portfolios of financial securities such as equities, bonds, money market instruments, and other assets. Managed by Asset Management Companies (AMCs) like SBI Mutual Fund and HDFC Asset Management Company, mutual funds aim to generate returns in line with specific investment objectives, such as capital appreciation, income generation, or capital preservation. Investors in mutual funds are allotted units based on the Net Asset Value (NAV), which represents the per-unit value of the fund’s holdings. The NAV fluctuates according to changes in the market value of the underlying assets. Mutual funds offer diversification, professional management, liquidity, and accessibility, making them suitable for both small and large investors. They are broadly categorized into equity funds, debt funds, hybrid funds, and index funds, each varying in risk and return profile. Due to regulatory oversight, transparency, and ease of investment through mechanisms like Systematic Investment Plans (SIPs), mutual funds have become a popular investment avenue for long-term wealth creation and financial planning. Overall, mutual funds serve as an efficient financial intermediary that connects individual investors to capital markets while managing risk through diversification and professional expertise.