What is a REITs and InvITs Index?

About REITs and InvITs Index:

• The new index aims to track the performance of REITs and InvITs that are publicly listed and traded on the NSE.
• Base year: 1 July 2019
• The index will be reviewed and rebalanced every quarter.
• The weights of securities within the index are based on their free-float market capitalization, subject to a security cap of 33% each and the aggregate weight of top-3 securities is capped at 72%.
• The top constituents of the Nifty Reits & InvITs index include Embassy Office Parks Reit, Powergrid Infrastructure Investment etc.

What are REITs?

• It is a company that owns, operates, or finances income-generating real estate.
• Most of them are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments).
• It is modelled after mutual funds; REITs pool the capital of numerous investors.
• This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.

What are InvITs?

• These are mutual fund-like institutions that enable investments into the infrastructure sector by pooling small sums of money from a multitude of individual investors for directly investing in infrastructure
• These are set up as a trust and registered with SEBI.
• An InvIT has 4 parties Trustee, Sponsor(s) and Investment Manager and Project Manager

 

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Q1) What is the Securities and Exchange Board of India?

It is the regulatory body that oversees the securities market in India. SEBI was established in 1988 as a non-statutory body and was given statutory powers in 1992 with the passing of the Securities and Exchange Board of India Act.

Source: NSE launches India’s first Reits and InvITs Index