Sebi Proposes Higher Mf Exposure In Reits, Invits — Investors May Gain From New Diversification Window

In a move aimed astatine boosting superior flows and broadening diversification for investors, nan Securities and Exchange Board of India (SEBI) has projected to raise communal money (MF) finance limits successful Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs).

As per nan existent regulations, communal costs tin put up to 10% of a scheme’s nett plus worth (NAV) successful Reits and InvITs, pinch a headdress of 5% successful a azygous issuer. The caller connection recommends raising nan azygous issuer limit to 10% and wide vulnerability to 20% for equity and hybrid schemes. Debt schemes, however, will clasp nan 10% limit, considering nan comparatively higher consequence and perpetual quality of these instruments.

The move could unfastened up caller return avenues for communal money investors, particularly successful equity and hybrid categories, and heighten nan visibility of Reits and InvITs — which person seen constricted traction successful India contempt world popularity.

Globally, Reits and InvITs are treated arsenic equity instruments and included successful indices for illustration nan MSCI India Small Cap Index and FTSE India Index. However, successful India, they are still considered hybrid instruments, owed to their unsocial rate travel patterns and valuation complexities. SEBI has sought nationalist and manufacture feedback connected whether Reits and InvITs should beryllium reclassified arsenic equity for scale inclusion.

As of December 31, 2024, communal money vulnerability to these instruments stood astatine ₹20,087 crore, pinch mean allocations of 2.1% successful equity schemes, 3.7% successful indebtedness schemes, and 2.4% successful hybrid schemes. There are presently 4 Reits and 17 InvITs listed connected Indian exchanges — though galore stay illiquid.

If implemented, nan projected changes could importantly heighten communal money information successful India’s increasing infrastructure and existent property segments — perchance creating amended semipermanent wealthiness opportunities for investors done diversification and unchangeable rate flows.

Published on: Apr 17, 2025 9:09 PM IST