REIT Mutual Funds enable investors to benefit from the real estate boom by investing in high-priced real estate. Properties like apartment complexes, infrastructure, healthcare buildings, etc. are included in REIT or Real Estate Investment Trust Mutual Funds. Small and big investors can invest in REIT to earn dividend income.
If you are looking into the option of investing in REIT and diversifying your investment profile, check out the best REIT Mutual Funds in India, features and taxability of REIT and if you should consider investing. Read on!
There are three best REIT Mutual Funds that provide investors with additional diversification and yield opportunities. They are:
|S No.||Name of the Real Estate Mutual Fund||NAV (Net Asset Value)|
|1.||Kotak International REIT FOF||Rs. 10.20|
|2.||PGIM India Global Select Real Estate Securities FOF- Regular Plan- Growth||Rs. 10.05|
|3.||Mahindra Manulife Asia Pacific REITs FOF- Direct Plan- Growth||Rs. 9.34|
Expected return rate (p.a)
Time Period (Years)
REIT mutual funds are a type of sector fund that invests in securities from real estate sectors. The funds generated from investment act as capital to support a real estate company in building a property. Therefore, if the industry grows and makes a profit, the funds reap good returns.
However, on which Real Estate Company the fund will be invested will depend on the investment objective. Also, they can invest in property either directly, indirectly or through Real Estate Investment Trust (REIT).
Investing in the real estate sector directly offers low liquidity to investors as it is not so easy to sell a property. However, investing in REIT Mutual Funds rules out this problem as investors can liquidate it whenever they want it and help gain higher gains.
The corpus of REIT Mutual Funds is invested in a wide range of properties covering commercial, agricultural and residential sectors. So, investors can enjoy the benefits of different sub-sectors at once.
Investors get a great deal of investment flexibility in this scheme. So, depending on the amount of money they want to invest and their financial goal, investors can choose which funds they want.
Another feature of best REIT Mutual funds is balancing out the high risk involved in one’s portfolio. For example, it is known that real estate prices are highly volatile, but due to their diversification, it does not have much effect on real estate funds.
Here are the benefits of investing in REITs Mutual Funds:
REIT Mutual Funds minimises the effort required to put in by an investor. In other words, investors do not have to worry as professional fund managers take all the investment responsibilities. In addition, there are no paper works or legal status processes involved.
Undoubtedly, getting ownership of a property is time-consuming work and a tedious job too. An interested investor can benefit from REIT Mutual Funds, as they act as an alternative to buying property. As a result, they can save themselves from the hassle of maintaining the property and eliminate the risk of getting involved in litigation.
It acts as outstanding protection against inflation for investors. This is because whenever inflation rises, the property prices rise, and so does the rent. This increases the unit price of REIT Mutual funds, thus benefiting the investors.
You can consider investing in REIT mutual funds if:
The taxability of REIT Mutual Funds can be divided into two categories. One is dividend tax, and the other is capital gain tax. The taxation details are as follows:
Those who wish to invest in REIT mutual funds can check out the 3 best-performing real estate mutual funds in India. Investing in real estate mutual funds has many benefits. However, make your decision after carefully analysing its features and taxability structure and the risk returns involved. If you want to invest, visit Navi Mutual Fund to get started!
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
REIT Mutual Funds are much safer than a single real estate property ownership or REIT investment, given these funds offer diversification. However, they also involve risks such as changes in price due to market crashes, credit risk
and poor management risk.
They offer additional diversification by:
Offering real estate options for multiple countries
Exposure to numerous businesses of real estate like residential, healthcare, offices, data centre and others
Increased yield opportunity by decreasing the concentration risk
No, REIT Mutual Fund is not the same as REIT although they are commonly considered to be the same. It differs based on their type of investment, tax treatment, and dividend distribution system. So, you must treat it as two options.
Many REIT Mutual Funds charge specific management fees or one-time fees for managing the funds. However, this amount will be fixed at a certain percentage levied on your total investment amount. So, do not forget to consider this before making your investment decision.
5. What does market risk in REIT Mutual Funds mean?
REIT Mutual funds are exposed to market risk, which means it is highly dependent on the demand of the properties they invested in. Thus, if the performance of the market is good, then the fund will also offer good returns. However, in case of sluggish market conditions, the returns will be down too.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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