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About The REITs and InvITs Index

Context:

Recently, NSE Indices Ltd, a subsidiary of the National Stock Exchange (NSE), launched India’s first-ever Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) Index

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. What is the REITs and InvITs Index?
  2. What are REITs?
  3. What are InvITs?

What is the REITs and InvITs Index?

  • The REITs and InvITs Index tracks the performance of publicly listed and traded REITs and InvITs on the NSE.
  • The index’s base year is 1 July 2019, and it will be reviewed and rebalanced every quarter.
  • The index’s securities’ weights are determined based on their free-float market capitalization, with a security cap of 33% each, and the top three securities’ combined weight is capped at 72%.
  • The Nifty Reits & InvITs index’s top constituents include Embassy Office Parks REIT and Powergrid Infrastructure Investment.

What are REITs?

  • Companies that own, operate, or finance income-generating real estate.
  • Publicly traded like stocks, making them highly liquid.
  • Modeled after mutual funds, pooling the capital of numerous investors.
  • Enables individual investors to earn dividends from real estate investments without the need to buy, manage, or finance any properties themselves.

What are InvITs?

  • Mutual fund-like institutions that allow investments in the infrastructure sector by pooling small sums of money from individual investors.
  • Set up as a trust and registered with SEBI.
  • Composed of four parties: Trustee, Sponsor(s), Investment Manager, and Project Manager.

Source: Live Mint


March 2024
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