Indian mutual funds will be allowed to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), the market regulator said on Saturday, a move aimed at boosting investor interest in such alternative investments.

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The Securities and Exchange Board of India (SEBI) had been working on easing regulations on REITs and InvITs to woo more investors to India`s capital-starved property sector.

A fund would not be able to invest more than 5 percent of its net asset value in units of a single issuer of REIT or InvITs, the regulator said in a statement. 

The maximum allowed investment in the alternative instruments by a single fund would be capped at 10 percent, it added.

REITs or InvITs are listed entities that invest in rent-yielding assets and distribute most of their income to shareholders as dividends.

The decisions were taken during SEBI`s board meeting in western Indian city of Jaipur.