Sustainability funds post healthy returns in Q1

Global sustainability equity funds generated solid returns in the first quarter this year amid capital market volatility, with abrdn Japanese Sustainable Equity generating the highest rate of return at 17.2%, according to Morningstar Research (Thailand).

The Thai unit of Morningstar, an American financial services firm, reported sustainable mutual funds in Thailand had a total net asset value of 57 billion baht in the quarter to March.

There are 54 funds investing in Thailand and another 94 funds investing abroad with net asset values of 9 billion and 48 billion baht, respectively.

The global sustainability equity fund group earned an average return of 5.4% during the quarter with a net asset value of 32 billion baht. Within this group, funds that generated the best returns comprise abrdn Japanese Sustainable Equity and abrdn European Sustainable Equity, with returns of 17.2% and 14.4%, respectively.

Most funds in this group invest in environmental, social and governance (ESG) purposes, with United Equity Sustainable Global Fund offering the highest return at 11%, followed by Bualuang Sustainable Investing Port RMF at 9.6%.

Most Thai ESG (TESG) funds, which invest in securities and bonds that align with ESG criteria, posted negative returns, except Bualuang Top-Ten Thailand ESG fund, which had a return of 1.54%. The TESG group was established in late 2023, with the government providing tax deductions for investment in the funds.

The alternative energy equity group had a net asset value of 7.7 billion baht as of March. Funds with an ESG investment theme focusing on climate change posted an average return of -7.8%.

As of March 31, 30 TESG funds were issued with a net asset value of 6.6 billion baht, posting an average return of -2.43%. The Stock Exchange of Thailand’s (SET) average total return (TR) was -1.62%, noted Morningstar.

Only three TESG funds beat the SET TR index, comprising Bualuang Top-Ten Thailand ESG with a return of 1.54%, followed by Krungthai ESG A Grade (KTAG) 70/30 - ThaiESG and Asset Plus Equity Thailand ESG, which recorded negative returns of -1.30% and -1.48%, respectively, said the research firm.

The global sustainability equity fund group earned an average return of 5.4% during the quarter with a net asset value of 32 billion baht. MORNINGSTAR RESEARCH THAILAND