Mutual fund (MF) houses are rejoicing the securities and exchange board of India’s decision to allow MFs to launch real estate schemes. In fact, they have been waiting for almost two years to get the nod from the stock market regulator. For late comers, you don’t need lakhs or crores of rupees to invest in real estate anymore. You can buy a share of the pie with few thousands, just like you do in any other MF scheme.
How does it work? The MF will collect money from people like you and invest it in realy and related assests as per Sebi norms. The units will be listed in the stock exchange and, just like any scheme, the net asset value of the scheme will be declared everyday. That means, you can track how much your investment has grown on an everyday basis.
That was for the concept? But is it such a great news for individual investors? Mr. Suresh Sadagopan, Ladder 7 Financial Planners chief financial planner, says, “The real estate investment trusts which already exist have high ticket size of 25 lakh or above. Now, with a few thousands, people will get an opportunity to invest in real estate MF”.
But don’t run to the bank to withdraw money to invest in REMF. First, understand the risk behind it. Before that you should also keep in mind that REMF will essentially help you diversify your portfolio. That means, you have to decide what percentage of your total portfolio will be invested in real estate . Also, like any sector, real estate may also go through cycles. Sure, we have seen the prices skyrocketing in the last few years. But what goes up may also come down. So, you should have time on you side if you are investing in the real estate sector.