NSE has announced the launch of India’s first ever index focused on REITs and InvITs. The name of the index is NSE REITs & InvITs Index. This new index will track the performance of REITs and InvITs that are publicly listed and traded at the National Stock Exchange.
As many of you may know both REITs and InvITs are Special Purpose Vehicles (or SPVs) used to route investment in infrastructure space. The REITs invest only in real estate projects whereas the InvITs invest in infrastructure projects which have long gestation periods. Both these instruments allow investors to get exposure to diversified and regular income-generating real estate and infrastructure projects and assets. These are listed and traded on stock exchanges and can be easily traded like regular stocks and ETFs.
NSE REITs & InvITs Index
Now let’s see what is NSE’s REITs & InvITs Index in India and how much securities are part of this index?
Here are the details of this index –
- This index will initially be made up of 3 sectors – namely, realty, power, and services.
- As of now (April 2023), the realty sector has 57.52% weight (which is the highest); power sector has 35.61% and finally the services sector has 6.87% weight in the index.
- The Nifty REITs & InvITs will be made up of 6 companies initially – Embassy Office Parks REIT (weight of 32.95%), Powergrid Infrastructure Investment Ltd. (20.27%), Mindspace Business Parks REIT (15.35%), India Grid Trust (15.34%), Brookfield India Real Estate Trust (9.22%), and IRB INVIT Fund (6.87%).
- As per the rules, there is an upper cap of 33% on the weightage of indivudal securities. Also, there is an aggregate weight cap of 72% on the combined weight of the top 3 securities.
- The Nifty REITs & InvITs Index has a base date of July 01, 2019, and a base value of 1000.
- The index will be reviewed and rebalanced on a quarterly basis.
You check other details about this index here.
Should you Invest in NSE REITs & InvITs Index (2023)?
In India, REITs and InvITs are a new category and hence, are just learning how to walk. The runway is huge for them if you compare with the developed markets where REITs make up a significant percentage of real estate market capitalization. And given the limited number of individual REITs and InvITs in India, it was difficult to build a diversified portfolio of real estate and infrastructure projects efficiently for an investor.
But with the launch of this new NSE REITs & InvITs Index, this might change. There are still no funds that track this index so it is not possible to invest in this index as of now directly. But if any AMCs takes a lead and decides to launch a mutual fund or ETF tracking this index, it could be a reasonably good option for investors who are looking at alternative assets to diversify their core portfolio which is made up of equity, debt and gold only.
I hope you found this discussion about India’s first Real Estate Investment Trusts and Infrastructure Investment Trusts index – NSE’s Nifty REITs and InvITs Index (2023), useful. Let’s no wait to see when we get to see the launch of a new fund (NFO) or ETF tracking this index.