The NFO is open and closes on November 29. Investors can put in a minimum of ₹5,000 and in multiples of ₹1 thereafter.
Real estate investment trusts (REITs) provide a natural hedge against inflation. Real estate rents and values tend to increase when prices do, in part due to the fact that many leases are tied to inflation. Wealth advisors said returns from such a fund will be driven by dividend yield from the securities held, currency appreciation and capital appreciation on sale of holdings.
In India, in terms of REITS the only listed options available are Brookfield, Embassy and Mindspace that give investors exposure to commercial real estate. The new fund offer will give exposure to a variety of REITs.
“This overseas REIT fund gives you geographical diversification across different countries with exposure to segments like senior living, logistics, data centres, healthcare, self-storage and supply chain,” says Deepak Chhabria, founder, Axiom Financial Solutions.
The top segments where the fund has exposure are residential (22.8%), industrial property (20.1%), diversified (18.2%), retail property (11.3%), and hotels/resorts & entertainment (10.5%). The top 5 holdings of the funds are REIT Prologis (6.4%), Healthcare REIT – Welltower (6.3%), Equity Residential (4.8%), Life Storage (4.4%) and Rexford Industrial Realty (3.9 %).
In terms of performance, since its inception in December 2015 to September 30, 2020, it has given net annualised returns of 6.9%. On a 5-year basis it has returned 6.63% (net annualised) versus the benchmark’s 4.53%.
Some financial planners believe that REITs potentially can give you better returns than fixed deposits, but investors should be ready to hold them for a long term of at least 10 years as there could be intermittent volatility. “REITs are a play on economic confidence and consumer sentiment which will take some time to come back, given that the pandemic is not yet over globally,” says Nirav Karkera, head of research, Fisdom. Nirav believes only patient investors with an outlook of 8-10 years should allocate here.