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Kotak International REIT Fund of Fund review: Should you invest?

Kotak International REIT FoF allows you to invest in real estate without physical ownership. The scheme has chosen to invest its entire corpus in an overseas fund

December 18, 2020 / 09:37 AM IST

Real estate has always been one of the most favoured sectors for Indian investors. And, as with gold, the desire for owning properties in digital form is also gaining ground with the coming of real-estate investment trusts. Now, a new ‘Kotak International REIT FoF,’ has been rolled out. It is the first Real Estate Investment Trust (REIT) focused mutual fund in India. This fund of funds (FOF) scheme will invest its entire corpus in an international scheme that will invest in REITs across the Asia Pacific region (excluding Japan).

What is it about?

Kotak International REIT FoF will invest in ‘SMAM Asia REIT Sub Trust Fund,’ which is managed by Japan-based Sumitomo Mitsui DS Asset Management Company. SMAM Asia REIT Sub Trust Fund is one of Asia Pacific’s largest REITs with exposure to Singapore, Australia and Hong Kong.

Simply put, a REIT is an investment trust or a company that invests in rent-generating properties. Any property developer or a builder that owns a land parcel can roll out a REIT. Now, a REIT can own, operate and lease multiple properties. REITs are listed and traded in the exchanges. Think of it as a property from which you’d like to earn a rental income. Instead, you can invest in a REIT, which itself owns and leases out properties and earns rental income, which it then passes on to you. REITs are a convenient way to hold real estate in your portfolio, without physically owning a property.