- Date : 22/06/2023
- Read: 3 mins
Green energy is the next big thing as more companies adopt renewable energy resources. Green energy mutual funds can invest in these companies and give good returns. Know what these funds mean and the available options.
- Green energy mutual funds invest primarily in stocks of companies engaged in green energy production or distribution.
- These funds can be a good option considering the increasing application of green energy in many fields.
- There are two mutual funds which invest in green energy companies.
- You can invest in them to diversify your portfolio and also benefit from the growth of green energy companies
Renewable energy resources are the future, given the depleting nature of non-renewable sources and the pollution they generate. Many companies and households have adopted green energy for their everyday needs.
In the investment world, too, green energy is gaining traction. Stocks of many green energy companies are rising, making them a lucrative investment avenue. Similarly, green energy mutual funds are also coming to the fore and can be a good choice given their diversified portfolio and expert fund management.
What are Green Energy Mutual Funds?
Green energy mutual funds are equity-oriented mutual funds that invest in companies manufacturing and distributing green energy. A significant part of their portfolio is allocated towards green energy companies, making them a thematic mutual fund.
Best Green Energy Mutual Funds in India
Two green energy mutual funds are being sold in the Indian markets. Here’s a look at these funds –
Things to keep in mind when investing in green energy MF
While the leading green energy mutual funds have yielded attractive returns, here are some things to consider –
- Being sectoral funds, the portfolio is concentrated in one sector and limits diversification.
- It is an equity fund which has a high-risk profile.
- Understand the taxability of returns before investing
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The bottom line
Green energy mutual funds can be an excellent addition to your portfolio. However, assess your investment strategy before investing. Also, limit your exposure to the fund since it is a sectoral fund with a high level of concentration risk.
Assess the fund portfolio, compare returns and then make an informed decision.