Securities and Exchange Board of India (Sebi) is mulling over enhancing the limits for investments in REITs and InvITs by Mutual Funds to provide wider avenues and further diversification to the MF schemes. As REITs and InvITs combine the features of both equity and debt instruments, the regulator has also asked if there is a merit in classifying such securities as 'equity' and if they should be included in equity indices for the purpose of investment by mutual funds.
It has also sought opinion on whether the proposals regarding relaxation in investment restrictions in REITs and InvITs for MF schemes are appropriate?
The market regulator on Thursday issued a consultation paper on this, seeking public feedback by May 11, 2025.
A Sebi data suggests 32 equity mutual fund schemes having exposure in REITs and InvITs as on December 31, 2024 with assets under management (AUM) of Rs 2,60,914 crore. Meanwhile, 20 debt mutual fund schemes were exposed to REITs and InvITs as on this date. The AUM is worth Rs 43,788 crore.
Apart from pure equity and debt oriented MF schemes, 53 hybrid schemes have exposure to REITs and InvITs with AUM of Rs 5,76,008 crore as on December 31, 2024. There are 10 solution oriented schemes with AUM of Rs 19,956 crore. In all there are 115 schemes with AUM amounting to Rs 9,00,666 crore.
The proposal is expected to increase the capital inflow into these instruments, broadening their market base and liquidity, the 6-page consultation paper said.
Currently there are four REITs listed on the BSE and NSE viz. Embassy REIT, Brookfield REIT, Mindspace REIT and Nexus Select Trust. There are 18 InvITs including Indus Infra Trust, National Highways Infra Trust, Energy Infrastructure Trust, India Grid Trust, Powergrid Infrastructure Investment Trust and Altius Telecom Infrastructure Trust.
What AMFI recommends
Industry association AMFI has recommended that dedicated schemes for REITs and InvITs may be considered in the medium to long term.
The Mutual Fund Administration Corporation (MFAC) advised against launching a dedicated mutual fund scheme for REITs and InvITs due to their limited number and low market liquidity. However, it suggested increasing investment limits in these instruments, particularly for equity schemes, after evaluating their current listings, trading volumes, and characteristics.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
It has also sought opinion on whether the proposals regarding relaxation in investment restrictions in REITs and InvITs for MF schemes are appropriate?
The market regulator on Thursday issued a consultation paper on this, seeking public feedback by May 11, 2025.
A Sebi data suggests 32 equity mutual fund schemes having exposure in REITs and InvITs as on December 31, 2024 with assets under management (AUM) of Rs 2,60,914 crore. Meanwhile, 20 debt mutual fund schemes were exposed to REITs and InvITs as on this date. The AUM is worth Rs 43,788 crore.
Apart from pure equity and debt oriented MF schemes, 53 hybrid schemes have exposure to REITs and InvITs with AUM of Rs 5,76,008 crore as on December 31, 2024. There are 10 solution oriented schemes with AUM of Rs 19,956 crore. In all there are 115 schemes with AUM amounting to Rs 9,00,666 crore.
The proposal is expected to increase the capital inflow into these instruments, broadening their market base and liquidity, the 6-page consultation paper said.
Currently there are four REITs listed on the BSE and NSE viz. Embassy REIT, Brookfield REIT, Mindspace REIT and Nexus Select Trust. There are 18 InvITs including Indus Infra Trust, National Highways Infra Trust, Energy Infrastructure Trust, India Grid Trust, Powergrid Infrastructure Investment Trust and Altius Telecom Infrastructure Trust.
What AMFI recommends
Industry association AMFI has recommended that dedicated schemes for REITs and InvITs may be considered in the medium to long term.
The Mutual Fund Administration Corporation (MFAC) advised against launching a dedicated mutual fund scheme for REITs and InvITs due to their limited number and low market liquidity. However, it suggested increasing investment limits in these instruments, particularly for equity schemes, after evaluating their current listings, trading volumes, and characteristics.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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