Mutual Funds: 3 top performing green energy funds for sustainable investing

India’s green energy sector is experiencing an exhilarating growth trajectory, characterized by abundant innovation and a robust emphasis on solar and wind power. This expansion not only benefits the environment but also presents substantial economic opportunities for India.

Abeer Ray
First Published21 Jun 2024, 09:54 AM IST
Making the most of India's burgeoning energy sector.
Making the most of India’s burgeoning energy sector.

India is at the forefront of advocating for renewable energy globally. It has committed to installing 500 GW of renewable energy capacity by 2030, marking one of the most ambitious expansion plans in the world. India’s progress is evident as it currently ranks as the world’s 4th largest installer of renewable energy, with its solar and wind power industries experiencing rapid growth.

What propels India’s green energy sector?

India’s renewable energy sector is thriving, driven by a confluence of compelling factors. Let’s explore the key forces accelerating this dynamic growth:

  • The Indian government has been instrumental in promoting renewable energy through supportive policies such as feed-in tariffs, subsidies for solar panels, and tax incentives for renewable energy firms.
  • The decreasing costs of renewables, propelled by technological advancements, have substantially reduced the expense of solar panels and wind turbines, thereby enhancing the financial viability of renewable energy in comparison to conventional fossil fuels.
  • Energy security is a critical issue for India due to its heavy reliance on imported fossil fuels, which are susceptible to price swings and geopolitical issues. By expanding its renewable energy infrastructure, India can diminish its dependency on foreign oil and achieve a more reliable energy supply.
  • Addressing climate change is paramount for India, given its heightened vulnerability to its effects. Expanding the green energy sector is essential for India to curb greenhouse gas emissions and alleviate the effects of climate change.
  • As India’s population continues to grow rapidly, so does the demand for electricity. Embracing renewable energy provides a clean and sustainable solution to meet this escalating demand for power.

India’s ambitious objectives, supported by these compelling factors, establish the country as a frontrunner in the global shift towards clean energy. This illustrates why investors are increasingly drawn to investing in the green energy sector.

Also Read | How to become rich by investing in mutual funds— Explained

Investing in green energy mutual funds

Putting your money into green energy mutual funds is an excellent method to ensure your investments reflect your principles. These funds focus on companies leading in renewable energy and clean technologies, enabling you to contribute to climate change solutions while possibly achieving strong financial returns.

The following table illustrates some top mutual fund houses that turned their attention towards the energy sector to harness the benefits from this sector.

Name of the fund

5-year returns (in %)

Tata Resources & Energy Fund

27.39

DSP Natural Resources and New Energy Fund

24.73

SBI Energy Opportunities Fund

-

Source: AMFI (As of June 20, 2024)

There are other funds too invested partially in this sector. These include:

Name of the fund 

Exposure to the energy sector (in %)

Quant Focused Fund

10.4

Nippon India Power & Infra Growth

6

SBI Infrastructure Fund

8.2

Bank Of India Manufacturing & Infrastructure Growth

14.4

Source: Kuvera.in (As of June 20, 2024)

Opting for a green energy mutual fund provides diversification across multiple companies in the sector, thereby lowering risk compared to selecting individual stocks. Fund managers handle research and portfolio management, offering expertise and oversight.
 


 

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First Published:21 Jun 2024, 09:54 AM IST
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