Sebi to allow mutual funds to invest in REITs, InvITs
Capital and commodity markets regulator SEBI plans to allow mutual funds to invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvIts). SEBI plans to categorise these products as â€˜alternative securities.‘
Capital and commodity markets regulator SEBI plans to allow mutual funds to invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvIts). SEBI plans to categorise these products as ‘alternative securities.’
This is among the proposals to be discussed at the regulator’s board meeting in Jaipur on January 14.
Moneycontrol learns there will be caps on how much mutual funds can invest in alternative securities, in respect of schemes as well as issuers.
A mutual fund scheme will be barred from investing more than 5 percent of its net asset value in units of single issuer, and all schemes put together cannot invest more than 10 percent in units of a single issuer.
Also, no scheme can invest more than 10 percent of its NAV in units of alternative securities.
These rules will be applicable for all fresh investments by all schemes. As for existing schemes intending to invest in alternative securities, the mutual fund will have to stick to Regulation 18(15A), which stipulates that there is no change in the fundamental attributes of any scheme or fees and expenses payable by unitholders.
The regulator also plans to tweak its rules for settlement and penalty.
Many entities penalized by the regulator have been filing settlement application beyond the specified deadline and in most cases, the applications are admitted to speed up settlement.The regulator feels that this is unfair to those applicants who do file their applications in the time period specified in the settlement regulations. At present, there is no provision for charging an additional fee for processing such delayed applications and interest in case of excessive delay in payment of penalty