Real estate MFs: new option for investors

THE SECURITIES and Exchange Board of India recently spelt out its guidelines for real estate mutual funds (REMFs). However, it seems unlikely that any REMF will be launched in the near future, considering the ground realities.

A real estate mutual fund invests in the real estate market and is governed by existing SEBI mutual fund regulations. Despite the nomenclature, an REMF is different from other mutual fund schemes that investors are getting used to in this country. There are, of course, significant commonalities: like other MFs an REMF is based on the concept of pooled diversification. Relatively small investments of individual investors are routed through professional fund managers who have explicitly stated investment objectives.