Sustainable investing
has grown fashionable over the last few years as investors continue to factor
in such aspects as ESG. Green portfolios that target companies that seem
socially responsible or provide their products and services in line with the
improved environmental themes are an element of this move.
In India, two primary products are available for building or accessing green portfolio smallcase and Portfolio Management Services (PMS).
The advantage of both options is that each suits a distinct type of investor.
What
is a Green Portfolio?
A green portfolio is a
portfolio that invests in organizations or funds that show consideration for
environmental issues. These are generally in sectors like renewable energy,
electric vehicles, sustainable farming, and any firm keen on its climate
impact. The objective of such a portfolio is to make economic profit and, at
the same time, protect the environment and practice sustainable development.
Indeed, there is rising interest in these portfolios, particularly in India,
and there is growing concern over how investment is done concerning values.
Small
case: An Easy Way to Build a Green Portfolio
Smallcase is an
exciting platform that lets retail investors directly invest in predesigned
portfolios within a particular theme or style the client selects. That is why
the platform provides users with a ready list of stocks or Exchange-Traded
Funds (ETFs) suitable for the chosen theme. In the case of a green portfolio,
Smallcase offers multiple portfolios that deal mainly with sustainability
investments. Such investments may also include those stakes found in companies
in renewable energy, waste management, and other industries classified as more
environmentally friendly.
Minimum
Investment
Smallcase has some
outstanding features, namely, the minimum investment is meager. For a green
portfolio, the required amount of investment is fundamentally the smallest,
coming at about ₹5,000 to ₹10,000, based on the selected small. This makes it
Very Liquid for the retail investor who wishes to invest in sustainable firms
but may be unable to invest a large amount of money. Investing in small amounts
also allows diversifying because different portfolios are presented according
to the green initiatives.
PMS
(Portfolio Management Services)
Portfolio Management
Services (PMS) are more private and professional, generally offered to the High
Net worth population (HNIs) or authorized investiture in many situations.
Specialized PMS providers hold portfolio management where the portfolio manager
buys a pool of investment products, including stocks and bonds, among others,
for the investor. Usually, the green portfolios in PMS are associated with
sustainable or socially responsible investment, while the portfolio manager
chooses specific shares of the company with consideration of ESG criteria.
Minimum
Investment
Thus, in contrast to
Smallcase, the minimum amount invested in PMS minimum
investment is
much higher, starting from ₹25 lakh to ₹50 lakh or more, according to the
service provider. This means that PMS is more suitable for the high network
individuals seeking personalized methodology to invest huge capital.
Furthermore, PMS providers impose a management fee that oscillates between 1%
to 2% of the assets under management or AUM plus performance fees, the
percentage of profit earned over a benchmark.
The advantage of PMS is
that it is an active management approach, where the portfolio manager hand-picks
and manages the portfolio according to the client’s investment objective and
tolerance to risk. High net-worth individuals interested in green portfolios
can invest in highly specialized PMS funds, with a manager who will
continuously oversee the portfolio to ensure that portfolios remain committed
to delivering on social, environmental, and governance responsibilities.
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