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What is an InvIT and why should investors have it in their portfolios?

InvITs list on the stock exchanges to raise capital for the purchase of a portfolio of operational infrastructure assets that are already producing consistent cash flows. It is like a hybrid product―with equity and fixed-income characteristics

December 07, 2022 / 02:42 PM IST
Representational image

Representational image

Infrastructure investment trusts, or InvITs, have been around for a while but many investors are still unaware of this option for investing that may very well replace some, if not all, of their debt investments with a little different flavour and a higher risk-reward ratio.

Should individual investors think about investing in InvITs? Before choosing to invest in this new asset class, let’s go through the basics.

InvITs look like mutual funds

InvITs, which function similarly to mutual funds (MFs), provide investors with units in exchange for their investments and allow for the pooling of capital from multiple investors, with specific management in charge of the assets.