NSE Indices launches India's first REITs & InvITs index with six securities

Weights of securities to be based in their free-float market cap, exposure to a particular REIT or InvIT not to exceed 33%; aggregate weight of top-three securities capped at 72%

NSE Indices on Tuesday launched a new index that will track the overall performances of listed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

The weights of securities in the index will be determined by their free-float market capitalisation, with the exposure to a particular REIT or InvIT being capped at 33 per cent. Also, the aggregate weight of the top-three securities is capped at 72 per cent.

At present, there are six securities in the index, with Embassy Office Parks Reit having the highest weightage at 33 per cent. Powergrid Infrastructure Investment has the second highest weight, at 20 per cent.

REITs are investment trusts (like mutual funds) that own and manage real estate properties generating regular income and capital appreciation on their investments. InvITs are similar to REITs except that they use the pooled money to own and run functional infrastructure assets like highways, roads, pipelines, warehouses and power plants.

Industry players said the launch of the index will help investors easily gauge the performance of these relatively new investment vehicles. It could also help create more awareness and attract new investors.

The index, which has a base date of July 1, 2019 and a base value of 1,000, will be reviewed and rebalanced on a quarterly basis. Data by NSE Indices shows that the index would have delivered a total return of -1.74 per cent in the last one year and 10.5 per cent since the base date.