Real estate mutual funds are a type of mutual fund which invests the funds into a basket of stocks of real estate companies.
New Delhi: Real estate mutual funds are a type of mutual fund which invests the funds into a basket of stocks of real estate companies. The stocks of companies’ substantially investing the money in construction and real estate development projects are considered under the real estate mutual fund as the underlying securities. Real estate mutual fund had introduced a possibility for retail and other small investors who are not able to invest directly into real estate.
Investors can enjoy the returns of multiple real estate assets by investing in real estate mutual funds. A person is capable of investing in one or two options in case of direct investment into a property or any fixed real estate asset. Real estate mutual funds have several other advantages as well such as higher flexibility, diversifications, better liquidity as compared to tangible real estate asset and relatively more stability.
As most of the mutual funds are open-ended in nature, investors are flexible to shift within the mutual fund schemes with more ease than the physical assets. The returns of real estate mutual funds are not largely affected by the change in asset prices, while, a drop in the property prices may hamper a person who is invested in the real estate asset itself.
There are other types of mutual funds available in the market which are relatively less risky than equity mutual funds. The list includes debt mutual funds, hybrid mutual funds, balanced mutual funds, index funds and fund of funds. According to the data released by the Association of Mutual Funds of India, retail investors prefer SIP route to invest in mutual funds. In March 2019 itself, mutual funds have collected as much as Rs 8,055 crore through the Systematic Investment Plan route.