Context: Recently, NSE Indices Ltd, a subsidiary of the National Stock Exchange (NSE), launched India’s first-ever Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) Index

• It will track the overall performances of listed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

About REITs and InvITs Index

• The new index aims to track the performance of REITs and InvITs that are publicly listed and traded on the NSE.

• The index, which has a base date of July 1, 2019 and a base value of 1,000.

• It will be reviewed and rebalanced on a quarterly basis. 

• The weights of securities within the index are based on their free-float market capitalization, subject to a security cap of 33% each and the aggregate weight of top-3 securities is capped at 72%.

• The top constituents of the Nifty Reits & InvITs index include Embassy Office Parks Reit, Powergrid Infrastructure Investment etc.

What are REITs?

• It is a company that owns, operates, or finances income-generating real estate.

• Most of them are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments).

• It is modelled after mutual funds; REITs pool the capital of numerous investors.

• This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.

What are InvITs?

• These are mutual fund-like institutions that enable investments into the infrastructure sector by pooling small sums of money from a multitude of individual investors for directly investing in infrastructure

• These are set up as a trust and registered with SEBI.

• An InvIT has 4 parties Trustee, Sponsor(s) and Investment Manager and Project Manager.