Why fund managers are wary of new ESG categories

The Securities and Exchange Board of India (Sebi) has issued a circular allowing mutual funds to launch six new categories under the ESG theme. However, fund managers have raised concerns about the categorization and potential limitations on stock selection. Experts suggest that the new regulations may result in lower discretion for managers and make passive strategies more attractive for investors. Some also argue that the launch of multiple ESG categories could add confusion for individual investors.

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