Socially responsible fund is a new concept in Indian context. But, this concept has acclaimed a vast popularity in the US mutual fund market. There, it is being used as an investment vehicle for years. Ethical funds, as they are popularly known, are specifically designed to cater the investment needs of people with personal ethical codes. This investing community is not in line with the normal investment practices.
They consider environmental, social and ethical issues like animal cruelty, human rights before investing in a particular company. Ethical funds follow a process of elimination while taking investment decisions and will not invest in companies engaged in running abattoirs, meat processing and packaging, production of liquor, tobacco, leather goods pesticides, pisciculture and sericulture, etc.
Now, this concept is striking the mindset of Indian mutual funds majors due to the growth of vegetarianism, growing popularity of organizations like people for animal, PETA, human right groups, etc. Ethical funds are all set to strike the Indian mutual fund market. This fund is designed to cater to the needs of investors with strong personal ethical codes in the Indian market. As a balanced fund, this new incarnation of mutual funds in Indian market will invest in equity and debt, but would focus on Ahimsa, simultaneously. The 'Ahimsa' fund is the Desi version of American Ethical fund. It provides investors with two options - income and social care opportunity.
Ahimsa fund is gaining its momentum steadily. An example of this is the JM heritage fund. This fund invests in areas like petrochemicals, auto, metals, banking and finance, engineering and technology companies. It also invests in FMCG and pharmacy companies, provided that these companies are above board with respect to cruelty issues. , during the process of short listing the companies to invest, wrote to about 1,000 companies and sought response to questions on their operations.
During this process, a number of interesting issues came to the fore. For instance Dabur does not experiment with animals before the launch of a new product but uses deer horn as an ingredient for Chyawanprash. That's why JM MF rejected Dabur as an . Apart from this JM MF has decided to invest in only those bio-tech companies which are trying to replace animal testing.
