Once hybrid orphan, REITs now wear equity colours

Cross no man's land with fund allocation hinging on liquidity and benchmarks

- ABHISHEK KUMAR

The equity classification of real estate investment trusts (REITs) for mutual fund (MF) investments is expected to encourage their entry into equity and hybrid schemes. But the depth of participation will hinge on whether they are added to equity and hybrid indices, as well as the supply of new units and market liquidity.

The Securities and Exchange Board of India's move to reclassify REITs will give the asset class more visibility, said Feroze Azeez, joint chief executive officer, Anand Rathi Wealth, adding that it may now find wider acceptance in select scheme categories.

"Thematic or sectoral funds with a real estate tilt may step up allocations, but diversified equity funds such as flexicap or largecap schemes are likely to remain cautious," he said.