ESG and Smart Beta Investing: A Synergistic Approach to Indian Equity Investing using the NIFTY 100 ESG Index and Multi-Factor Weighted Smart Beta Strategies

Smart Beta Investing Strategies have acquired momentum in emerging markets over the past decade; however, they have yet to be investigated in academia, and researchers are unable to provide empirical evidence. Previous research on the Indian equity markets and the clever beta strategies and factors has indicated that there is some optimism in the field. The authors augment the current corpus of research by employing an ESG-filtered index in conjunction with the conventional factors of value, size, and momentum to identify the ten most optimal stocks for each feasible portfolio configuration. A single factor and multi-factor weighting scheme are implemented to determine the ultimate portfolio and return. The Smart Beta portfolio exhibits superior returns when contrasted with its passive counterparts, as evidenced by statistical tools and risk-return characteristics. The absence of empirical evidence and a scarcity of data result in certain limitations for the study.