Quantum Mutual Fund Files Draft for Quantum Ethical Fund Focused on Ethical Investments

Quantum Mutual Fund has submitted a draft document to the Securities and Exchange Board of India (SEBI) for its upcoming Quantum Ethical Fund, an open-ended equity scheme designed to follow a comprehensive ethical theme. This fund aims to provide long-term capital appreciation by investing primarily in equity and equity-related instruments of companies adhering to specific ethical principles.

Objective and Benchmark

The Quantum Ethical Fund’s primary objective is to achieve long-term capital growth by focusing on companies that follow ethical guidelines. The scheme will be benchmarked against the BSE 500 Shariah Total Return Index, reflecting its commitment to ethical and Shariah-compliant investing. Chirag Mehta will be the fund manager.

Investment Allocation

The fund plans to allocate 80-100% of its corpus in equity and equity-related instruments of companies that meet a broad Ethical Framework. Additionally, the scheme will allocate 0-20% of its corpus in debt and money market instruments, ensuring these investments also align with ethical standards.

Ethical Investment Framework

The Quantum Ethical Fund will adhere to a strict ethical investment framework that includes the following exclusions:

• Ethical Exclusions: The scheme will avoid investing in companies that generate revenue from:
  • Alcohol
  • Gambling
  • Tobacco
  • Vulgar entertainment
  • Film exhibition
  • Media broadcasting and content
  • Film production and distribution
• Additional Exclusions: Companies involved in the following areas will also be excluded:
  • Mainstream or conventional financial services
  • Narcotic substances or harmful societal products
  • Leather industries
  • Meat and poultry industries or any form of animal cruelty
  • Animal testing, including pharmaceutical companies involved in such practices

• Financial Screening Criteria: To align with ethical considerations, the fund will implement financial screening criteria, which include:

• Interest-based debt should be less than 25% of total assets
• Interest income should be less than 4% of total income

These criteria are separate from the financial metrics used to assess the overall financial health of potential investments.

Investment Details

The Quantum Ethical Fund will have a minimum application amount of ₹500 for lump-sum investments and SIPs, with subsequent investments allowed in multiples of ₹1. For monthly SIPs, the minimum amount is ₹500, with a minimum of 12 instalments. The exit load is structured to be nil on 10% of units if redeemed or switched out within 365 days of allotment; a 1% exit load applies to the remaining 90% if redeemed or switched out within the same period. There is no exit load after 365 days.

The Quantum Ethical Fund is designed for investors seeking long-term capital growth while aligning their investments with ethical principles, providing a unique option for those prioritising ethical considerations in their financial decisions.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.