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In a consultation paper issued today, SEBI has proposed reclassification of units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs) as equity instruments.
Currently, these instruments fall under hybrid securities as they combine the features of both equity and debt instruments.
SEBI said, “It is observed that globally, in some jurisdiction’s REITs and InvITs are classified as equity instruments, and form part of equity indices. It is also observed that Indian REITs form part of some of the global equity indices such as MSCI India Small Cap Index, FTSE India Index etc.”
In another proposal, SEBI has been considering increasing the exposure limit of mutual funds in REITs/InvITs from 10% of the NAV to 20% of the NAV in equity and hybrid funds. However, the current limit of 10% of the NAV will continue in debt funds.
Further, the exposure limit on single issuer will also be increased from 5% to 10% across scheme categories, said SEBI.
Currently, the MF industry has invested Rs.20,807 crore in REITs and InvITs, which is 2.5% of the schemes’ AUM.
Finally, SEBI has also proposed introduction of dedicated mutual fund scheme for REITs and InvITs.
You can share your feedback to SEBI by May 11, 2025.
