REITs Catching Mutual Funds Fancy
Mutual funds have invested a whopping Rs 735 crore in emerging investment instrument REIT units in the first six months of 2020, nearly three-fold jump from the year-ago period. However, mutual funds' investment in infrastructure investment trusts (InvITs) dropped by 8 per cent to Rs 4,968 crore in the period under review, data with the Securities and Exchange Board of India (Sebi) showed. REITs and InvITs are relatively new investment instruments in the Indian context but are extremely popular in global markets. Investment by fund houses in REITs jumped from a mere Rs 7 crore in January 2019 to Rs 71 crore in January this year and further increased to Rs 402 crore in June 2020. Overall, mutual funds have increased their exposure in these investment avenues over the past one year. Fund managers infused Rs 735 crore in real estate investment trusts (REITs) in January-June 2020 compared to Rs 249 crore in the first six months of last year. Under the SEBI regulations, REITs and InvITs need to distribute a minimum of 90 per cent of their cash flows to unit holders. This makes them an attractive instrument for debt and hybrid mutual funds given the regular payout by these instruments. Also, in the case of REITs, yields are currently in the range of 7.50-8 per cent. In the case of InvITs the yields are in double digits. This further increases the attractiveness of these instruments for debt and hybrid mutual funds in the current environment where the RBI has been cutting interest rates and has announced several liquidity enhancing measures which have resulted in yields coming off significantly across tenures for high quality papers.
Tags : News/Views Latest News SEBI InvITs mutual funds REITs