Edelweiss Mutual Fund is set to launch India's first REITs-oriented index fund, giving investors a new way to gain exposure to the listed real estate sector through a single mutual fund. The launch has generated considerable interest. The fund provides exposure to a portfolio of listed Real Estate Investment Trusts (REITs) and leading real estate companies through a single investment.
However, it has also raised one key question — why doesn't the fund combine both Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) into a single passive scheme?
Responding to this query, Radhika Gupta, Managing Director and CEO of Edelweiss Mutual Fund, explained that the answer lies in the current regulatory framework governing passive funds.
According to Gupta, REITs are classified as equity instruments, whereas InvITs are treated as hybrid instruments. Combining the two would change the nature of the product from an equity index fund to a hybrid index fund, which is currently not permitted under SEBI's regulations for passive funds.
Gupta posted on social media platform X that, “Since everyone is asking why not a REIT and InvIT Index Fund... REIT is an equity instrument, InvITs are hybrid... Finally, do check the presentation; the vol is just a little higher than a pure REIT fund and much lower than a pure real estate fund.”
