What is a REITs and InvITs Index?

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What is a REITs and InvITs Index? Blog Image

Overview:

Recently, NSE Indices Ltd, a subsidiary of the National Stock Exchange (NSE), launched India’s first-ever Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (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

 


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