SEBI Treats REITs as Equity for Mutual Fund Holdings
Why in the news
SEBI changed how funds classify REITs, lifting earlier exposure restrictions.
Hybrid versus equity
| Feature | Hybrid | Equity |
|---|---|---|
| Nature | Debt plus equity traits | Company ownership |
| Risk | Moderate | High |
| Fund treatment | Exposure often capped | Higher exposure allowed |
| Income | Interest plus gains | Dividends plus gains |
Significance
- Equity funds can put more into commercial real estate.
- Encourages REIT growth and retail participation.
Exam angle
- Reclassification: hybrid to equity, for mutual fund investments.
- Regulator: SEBI; instrument: Real Estate Investment Trusts.
- Hybrid examples: convertible debentures and some preference shares.