Mutual fund houses have reportedly held talks with the capital markets regulator Sebi to urge for a dedicated category for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
As of now, there is some exposure to these categories through hybrid and multi-asset funds. Since these are seen as stand-alone asset classes on their own, therefore, some fund houses are of the view that there should be schemes dedicated solely to them.
REITs and InvITs have grown in the recent past and the value of exposure to mutual funds to REITs and InvITs stands at ₹8,416 crore as on Sept 30, 2023.
What are REITs & InvITs?
REIT is a trust that owns, operates or finances income-generating real estate. They were modeled after mutual funds as they accumulate the investment of a number of investors, enabling them to earn dividends without having to buy or manage the real estate.
Since they are like publicly-traded stocks and therefore, are highly liquid unlike real assets.
InvITs are like a business trust (like REITs) which owns, operates and manages operational infrastructure assets such as roads, power plants and transmission lines, among others.
These infrastructure assets then generate cash flows that are then distributed to the unitholders from time to time.
Regulator’s openness for norms
It is worth mentioning here that the markets regulator in its annual report 2022-23 mentioned that it is working to further develop the market for these trusts including bringing in norms for the follow-on offers by REITs and InvITs.
To streamline the process of public issues of REITs and InvITs, the time taken for allotment and listing after the closure of the issue was reduced from 12 to six working days.
REITs and InvITs were introduced in India to provide investors with an opportunity to gain exposure to real estate and infrastructure projects respectively.
Additionally, NSE recently launched the Nifty REITs and InvITs index to track the performance of REITs and InvITs that are listed, or listed but allowed to trade on the bourse.
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Updated: 19 Oct 2023, 10:38 AM IST