3 Best REIT Mutual Funds in India (2022): Features, Benefits & Taxability

Mutual funds

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!

3 Best REIT Mutual Funds in India

There are three best REIT Mutual Funds that provide investors with additional diversification and yield opportunities. They are:

*NAV as of March 10, 2022

What are REIT (Real Estate Investment Trust) Mutual Funds?

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). 

Features of REIT Mutual Funds

1. High Liquidity

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. 

2. Diversification of Portfolio

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. 

3. Flexibility in Investment

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. 

4. Stability in Portfolio

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.  

Benefits of REIT Mutual Funds

Here are the benefits of investing in REITs Mutual Funds:

1. Minimal Effort 

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.

2. Alternative to Buying Property

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. 

3. Protection Against Inflation

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. 

Also read: New Fund Offer: 3 Benefits Of Investing In NFO Mutual Funds

Should You Invest in Real Estate Mutual Funds?

You can consider investing in REIT mutual funds if:

• You are seeking exposure to the real-estate sector.
• You are looking to achieve capital appreciation.
• Wish to invest in the real estate sector but don’t want physical ownership of the properties.
• Want to diversify your investment portfolio.

Taxability of REIT Mutual Funds in India

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:

• If the investment is redeemed before three years, then the amount gained will be considered the income of the investors. So, it will be taxed according to the applicable tax rate. 
• If the redemption process takes place after three years of investment, the applicable tax rate will be 20% after applying for the indexation benefit.  
• If the income from dividends increases Rs. 5000 in a financial year, the fund house will deduct a TDS of 10% on it. 

Also Read: Taxation In Mutual Funds

Final Word

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.

FAQs on REIT Mutual Funds

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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.