- Date : 12/04/2023
- Read: 3 mins
What is NSE's REITs & InvITs Index in India? How many securities are tracked in NSE's REITs & InvITs Index, and what are the weight caps for each? Read this article to know more.
NSE Indices Limited, which is a subsidiary of the National Stock Exchange, has introduced a pioneering REITs & InvITs Index in India. The Nifty REITs & InvITs Index comprises six publicly listed or traded InvITs and REITs, making it the first of its kind in the country. The index is designed to follow the progress of these securities at the National Stock Exchange, with their weights based on the market capitalisation of publicly available shares, subject to a security cap of 33% each. The top three securities are capped at an aggregate weight of 72%. With a base date of July 1, 2019, and a base value of 1000, the Nifty REITs & InvITs Index will be reviewed and rebalanced on a quarterly basis. This article explores the implications of the index and its potential impact on the investment landscape in India.
W9hat are InvITs and REITs?
An investment vehicle known as Infrastructure Investment Trust (InvIT) or Real Estate Investment Trust (REIT) is designed to own real estate or infrastructure assets that generate revenue.
How do investors benefit through InvITs and REITs?
Investors who invest in REITs are exposed to a variety of real estate projects, whereas those who invest in InvITs are presented with opportunities to put money into infrastructure projects that take a longer time to develop. By investing in REITs and InvITs, individuals can earn a steady income from their investments in real estate and infrastructure assets.
According to NSE Indices CEO Mukesh Agarwal, REITs and InvITs are acknowledged as robust alternative financial instruments to raise funds against infrastructure and real estate projects that generate cash. He further noted that these instruments offer investors exposure to real estate or infrastructure assets and diversification of risk from conventional asset classes, such as equity, debt, and gold, while generating regular income.
Constituents of REITs & InvITs Index
Real estate accounts for 57.5% of the weight in the index, followed by the power at 35.6% and services at 6.8%.
The index currently consists of six securities. These include Embassy Office Parks REIT (33%), Power grid Infrastructure Investment (20%), Mindspace Business Parks REIT (15%), India Grid Trust (15%), Brookfield India REIT (9%) and IRB InvIT Fund (7%).
Returns to date from REITs & InvITs Index
Data from the NSE reveals that the Nifty REITs & InvITs Index's price return has experienced a decline of -4.13% QTD, with a total return of -2.17% for the same period. Over the course of the last year, its price return has dropped -8.97%, with its total return for the year amounting to -1.74%. Nevertheless, the index has had a total return of 10.48% since its inception, with a price return of 0.22%. Its price-to-earnings (P/E) ratio stands at 49.07, and its dividend yield is a notable 8.17%.
Investing in the Nifty REITs & InvITs Index offers investors diversification from traditional asset classes, such as equity, debt, and gold. The index is designed to provide exposure to a range of publicly listed or traded REITs and InvITs in India. Although the index has experienced a decline in QTD over the past year, it has had a total return of 10.48% since its inception. With a diversified portfolio and a high dividend yield of 8.17%, the index is expected to continue to generate steady returns in the