BackNSE launches India’s first Reits and InvITs Index
The new index— Nifty Reits and InvITs index—aims to track the performance of Reits and InvITs that are publicly listed and traded on the NSE
PremiumNSE Indices Ltd, a subsidiary of National Stock Exchange (NSE), has launched India’s first ever Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs) Index.
The new index— Nifty Reits and InvITs index—aims to track the performance of Reits and InvITs that are publicly listed and traded on the NSE. The weights of securities within the index are based on their free-float market capitalization, subject to a security cap of 33% each and aggregate weight of top-3 securities is capped at 72%. The Nifty Reits & InvITs Index has a base date of 1 July 2019 and a base value of 1,000. The index will be reviewed and rebalanced on a quarterly basis.
Reits and InvITs are investment vehicles that own revenue-generating real estate and infrastructure assets, respectively. Reits and InvITs can be an option for investors looking for regular income generation through a diversified portfolio of real estate or infrastructure assets.
“Reits and InvITs are recognized as strong alternative financial instruments to raise funds against the cash-generating infrastructure and real estate projects. For investors, these instruments provide exposure to real estate or infrastructure assets and offer diversification of risk from regular asset classes like equity, debt and gold and generate regular income," said Mukesh Agarwal, chief executive officer, NSE Indices.
“Globally, Reits and InvITs have been a good way for investors to diversify their portfolio. But in India, the market is fairly new and still developing. If a mutual fund launches a fund tracking such an index, it could be a good option for investors to consider a diversified portfolio rather than bet on a single Reit or InvIT, but we will have to see what kind of the tax treatment such funds get," said Deepesh Raghaw, founder of PersonalFinancePlan.
The top constituents of Nifty Reits & InvITs index include Embassy Office Parks Reit (32.9% weight), Powergrid Infrastructure Investment (20.2%), Mindspace Business Parks Reit (15.3%), India Grid Trust (15.3%).
The index has delivered total returns of negative 2.1% year to date, while in a one-year period, it has delivered total returns of negative 1.7%, which includes share price performance and income distribution to shareholders.
Since inception (1 July 2019), the index has delivered total returns at compounded annual growth rate (CAGR) of 10.48%, as against 12.06% delivered by Nippon India ETF Nifty BeES. The index has 57.5% weight to realty, 35.6% to power and 6.8% to services.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
