How often have you stared at a gleaming skyscraper in a tony address in your town and wished you could afford to buy a house there? If you have ended up sighing wistfully and walking away, here's some good news. Now, you may easily be able to own a small portion of a very swanky address.
There are two conditions of investment set by Sebi.
First, it is mandatory for an REMF to invest at least 35 per cent of its corpus in completed real estate assets (read flats, row houses, bungalows, shops). These could be either residential or commercial properties, but must be finished and ready-to-use and not under construction.
The second investment condition of Sebi mandates that at least 75 per cent of the corpus should be invested in real estate or related securities. These can be debentures of real estate companies and mortgage-backed securities and equity shares of real estate companies listed on the stock exchange.
Mis-selling. The same agent through whom you invest in MFs will now also sell you REMFs. Only time will tell whether agents will be able to differentiate the nuances of one REMF from another.
And although Barve says that the MF industry is gearing up to train agents and spread awareness, it will take some time - and probably some heart-burn too - before investors are able to realise the true worth and potential of REMFs. Your only genuine hope in the current scenario will be your REMF's offer document.
Apart from Sebi's nomination of cities in which REMFs can invest their finished projects and the taxation incidences on unitholders, most other things are in place. If all of what we have said has inclined you to sign up, then, hopefully, you will be able to do so in another three months, when India's first REMF ought to be born.
Beware of risks
Although REMFs open up a new asset class to investors that was otherwise restrictive, they come with a set of risks.
The 'others'. REMFs are free to invest the 25 per cent of the corpus that is left after investing in real estate or related securities in any security, related or unrelated to real estate. This can be either directly in the equity markets and debt instruments, or kept as cash. Sebi has allowed REMFs to take a call on this. But, how an REMF opts to invest this portion can have a bearing on its risk profile.
Flexible asset allocation. That is not the only flexibility that Sebi has allowed for REMFs. Beyond the mandated 35 per cent in finished real estate projects and within 75 per cent of the scheme's corpus, they have about four different types of securities to choose from.
There are two conditions of investment set by Sebi.
First, it is mandatory for an REMF to invest at least 35 per cent of its corpus in completed real estate assets (read flats, row houses, bungalows, shops). These could be either residential or commercial properties, but must be finished and ready-to-use and not under construction.
The second investment condition of Sebi mandates that at least 75 per cent of the corpus should be invested in real estate or related securities. These can be debentures of real estate companies and mortgage-backed securities and equity shares of real estate companies listed on the stock exchange.
Mis-selling. The same agent through whom you invest in MFs will now also sell you REMFs. Only time will tell whether agents will be able to differentiate the nuances of one REMF from another.
And although Barve says that the MF industry is gearing up to train agents and spread awareness, it will take some time - and probably some heart-burn too - before investors are able to realise the true worth and potential of REMFs. Your only genuine hope in the current scenario will be your REMF's offer document.
Apart from Sebi's nomination of cities in which REMFs can invest their finished projects and the taxation incidences on unitholders, most other things are in place. If all of what we have said has inclined you to sign up, then, hopefully, you will be able to do so in another three months, when India's first REMF ought to be born.
Beware of risks
Although REMFs open up a new asset class to investors that was otherwise restrictive, they come with a set of risks.
The 'others'. REMFs are free to invest the 25 per cent of the corpus that is left after investing in real estate or related securities in any security, related or unrelated to real estate. This can be either directly in the equity markets and debt instruments, or kept as cash. Sebi has allowed REMFs to take a call on this. But, how an REMF opts to invest this portion can have a bearing on its risk profile.
Flexible asset allocation. That is not the only flexibility that Sebi has allowed for REMFs. Beyond the mandated 35 per cent in finished real estate projects and within 75 per cent of the scheme's corpus, they have about four different types of securities to choose from.
After years of deliberation and planning, the Securities and Exchange Board of India has approved the launch of real estate mutual funds and issued a detailed set of guidelines on 16 April. All you may now need to shell out is a sum as low as Rs 5,000 to Rs 10,000 to invest in real estate. How will it work? Get ready for real estate mutual funds An REMF is a scheme much like any other closed-end MF scheme (that invests in shares and bonds) except for the fact that the new entity will invest in real estate. There are two conditions of investment set by Sebi. Beware of risks Although REMFs open up a new asset class to investors that was otherwise restrictive, they come with a set of risks. Mis-selling. The same agent through whom you invest in MFs will now also sell you REMFs. Only time will tell whether agents will be able to differentiate the nuances of one REMF from another. |
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