SEBI has come up with clarification on how mutual funds can invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs). REITs are somewhat similar to mutual funds which pools money from various investors to invest; REITs invest in commercial properties to generate rental income.
According to SEBI, AMCs can invest up to 10 per cent of its corpus in REITs and InvITs, with only 5 per cent of its corpus in units of single issuer. This investment comes with a restriction – AMCs cannot invest corpus of index funds and sector specific funds in REITs and InvITs. This move will help mutual funds explore yet another investment route, while providing investors with the choice to invest in real estate and infrastructure in a different form, unlike stock exposure in these two sectors. Although REITs as a concept has been talked of for some years, they are not available yet for mutual funds to take any sizable exposure in them.