Real Estate Mutual Funds (REMF)
Investments are a considerable part of savings, and there are a multitude of ways to do so. Real estate is considered one of the best ways to invest. Purchasing a property is always voted as the right investment decision. Real estate is one of the significant drivers of our economy, and recently, it is also one of the booming sectors in our country. But the major challenge many face is the capital or amount to own a property. Thankfully, there are Real Estate Mutual Funds to take care of that.
What are Real Estate Mutual Funds?
Like any other mutual fund, the real estate sector has funds invested in real estate companies' securities through Real Estate Mutual Funds (REMF). A significant part of these funds is used as an investment for commercial and corporate properties, residential complexes, and agricultural lands. These investments are made either directly or indirectly through Real Estate Investment Trusts (REITs).
Are real estate mutual funds a good investment?
There are multiple reasons to state that Real Estate Mutual Funds India is a good investment:
Investment flexibility: Investments are an excellent way to save money because they have flexible options, wherein you have the freedom to select the investment amounts.
Alternate to property purchase: Real estate mutual fund schemes are a great alternative to purchasing a property. You can benefit from the real estate growth without actually having to buy a property.
Portfolio diversification: Real estate funds are spread across different spectrums, which include residential, commercial, rental, and hospitality. Investors with limited capital sources can invest in these assorted real estate investments with less capital and create diverse portfolios.
Liquidity: Physical real estate does not have liquidity as it would take a certain amount of time to resale a property. On the other hand, real estate mutual funds are high on liquidity and are of greater interest for the investors because you can resale it easily and earn higher gains whenever the market is on the rise.
Stability: Although investing in real estate is considered a safe investment, but, there are chances that there will be a downturn in your property investment based on the locality and other factors. Real Estate Mutual Fund schemes are invested in various properties in multiple areas, and any fluctuation in the market will not make a massive difference to the funds.
Inflation: The funds are strongly protected against inflation. Inflation causes a spike in property prices and rents, which is advantageous for India's real estate funds as their value increases.
Returns of Investment: Depending on the sector's growth and the places where the funds are invested, there would be better chances of getting a higher return on investment.
Also Read: Why Real Estate Investment in India is Good
Real estate mutual funds vs. Real Estate Investment Trusts (REMF vs. REIT)
A Real Estate Investment Trust is a common term that is synonymously used for Real Estate Mutual Funds. However, there is a minute functional difference between these two terms, especially in the investment part.
Real Estate, Mutual Funds capital, is invested in real estate companies that own commercial, residential, agricultural, or land properties. Real Estate Investment Trust is an association where a group of members with common objective pool resources owns a land/property and develops it. These members are eligible for dividends and any profit in the real estate, and it is equally shared. In other terms, REIT is a channel through which you can invest in REMFs.
Who can invest in the Real Estate Mutual Fund scheme?
Any individual interested in the booming sector like real estate and is not looking forward to investing in a property can invest in the Real Estate Mutual Fund Scheme. Similar to other mutual funds, Real Estate Mutual Funds India also have their risks and rewards. If you are looking for immediate profits, then REMF is not the right pick, as there is a waiting period of three to five years to enjoy the investment benefits.
What is the best Real Estate Mutual Fund?
There are many established and popular real estate mutual funds in India with multiple benefits. You need to gauge the rewards and risks of each carefully and accordingly pick. Here are a few:
Aditya Birla Real Estate Fund
HDFC Property Fund
ICICI Pru India Opportunities Real Estate Fund
Everstone Horizon Realty Fund
Birla Sun Life Global Real Estate Fund and
Secura India Real Estate Fund.