SEIBI PERMITS TO LAUNCH “REAL ESTATE MUTUAL FUNDS”

SEIBI PERMITS TO LAUNCH “REAL ESTATE MUTUAL FUNDS”
Stock Market regulator SEBI on Friday 25/04/2008, finally notified
the amended guidlines for “Real Estates Mutual Funds”.
All Mutual Funds can launch real estate schemes. But, if a corporate
is looking to launch such
product must posses & show
proof of 5 years experience in
real estate business. The
guidelines also suggest that the
Assets of Real Estate Schemes
be valued every quarter by two
v a l v e r s . However, net
asset values (NAVs) may have
to be declared on a daily basis,
since these schemes will be
close ended and listed on
r e c o n g n i s e d stock exchanges.
Retail investors now can invest in
Real Estate as an estate class,
which has a low co-relation with
equity & bonds and enjoy the benefits of asset class diversification.
They can now invest in real estate space with as low as a few thousands,
which previously has been preserve of HNIs with deep pockets.
SEBI has mandated that 35% of the Net Assets of the scheme should
be invested directly in real estate assets. The rest may be invested
in mortgage-backed securities, securities of companies engaged in
dealing in real estate assets or in undertaking real estate developmet
projects and other securities with overall limit of not less than 75%
of the net assets of the scheme.
SEBI has also imposed caps of investments in a single city, single
project & securities issued by sponsor or associate companies.
So, the investors have change to own a real estate with small amounts,
in line after “INFRASTRUCTURE FUNDS” and previously introduced
“REAL ESTATE INVESTMENT TRUSTS (REITs), a new asset class
of ‘REAL ESTATE MUTUAL FUNDS’.