SEBI Approved For Real Estate Mutual Funds

Real Estate Mutual Funds (REMF) scheme is a scheme of mutual fund which has the investment objectives to speculate directly or indirectly in real estate property. This rule will be controlled by guidelines and provisions under regulations of Securities and Exchange Board of India (SEBI).  The units of REMFs will be listed mandatory on the stock exchanges and Indian real estate market and the structure of REMF’s will be initially close ended.

According to analysts, this can be a welcome development for the investment trust trade that allows common investors to participate in realty. These funds area unit adore alternative mutual funds, with the most distinction being that the underlying quality to be endowed in is realty.

Thus, the investors don't have to deal out large sums of cash to dabble within the property market. They will relish the high wave within the realty sector, by simply investing small amount of cash. Also, these funds are a good help attributable to the illiquid nature of property investments.

The REMFs ought to appoint a conservator who has been granted a certificate of registration to hold on the business of protector of securities by the Board. The conservator can keep the title of realty properties command by the REMFs. These schemes will invest in directly in realty properties within India, shares/equity /bonds/debentures of listed/unlisted firms,mortgage backed securities that deal in properties and conjointly undertake property development, and in different securities.

These funds will invest in realty market by raising funds overseas to invest within, since the underlying market still needs to develop. Also, declaring NAV on a day to day basis would be a challenge for these funds. While dealing with the concerned funds the non-being of a problems and exchange related to finding price, liquidity and settlement would be a major concern while trading with real estate funds. Real estate funds valuation process becomes difficult since they involve in physical assets.

In order to mitigate risks and to increase returns, these funds need to be geographically diversified. The risk of concentration should be reduced so as to earn fair returns on investments.

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