Nifty Reits & InvITs Index

Why in News?

Recently, India's first-ever Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs) Index was launched by National Stock Exchange Indices Ltd, a subsidiary of the National Stock Exchange of India.

What is the Nifty Reits & InvITs Index?

  • About:
    • The 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 an aggregate weight of top-3 securities capped at 72%.
    • The 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.
  • Top Constituents:
    • The top constituents of the Nifty Reits & InvITs index include Embassy Office Parks Reit, Powergrid Infrastructure Investment, Mindspace Business Parks Reit, and India Grid Trust.
    • The index has 57.5% weight to Real estate, 35.6% to power, and 6.8% to services.

What is Infrastructure Investment Trust?

  • An InvITs is a collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return.
  • InvITs are listed on exchanges just like stocks — through Initial Public Offering (IPO).
  • InvITs are regulated by the Securities and Exchange Board of India (SEBI) (Infrastructure Investment Trusts) Regulations, 2014.

What is a Real estate Investment Trust?

  • REIT refers to an entity created with the sole purpose of channeling investible funds into operating, owning or financing income-producing real estate.
  • REITs are modeled on the lines of mutual funds and provide investors with an extremely liquid way to get a stake in real estate.
  • It is a type of security that provides all types of investors, big or small, with an outlet for regular income, portfolio diversification, and long-term capital appreciation. Like any other security, REITs can enlist themselves on a stock exchange.
  • In India, the REIT were introduced by the SEBI in 2007.

What is SEBI?

  • The SEBI was established on 12th April, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
  • Major Function:
    • To protect the interests of investors in securities.
    • To regulate the securities market.

Source: ET