HDFC BSE REITS and Commercial Real Estate Index Fund is an open-ended index fund that tracks the BSE REITS and Commercial Real Estate Index (TRI). It sits in the index fund category and aims to deliver returns that correspond to the performance of this index, before fees and expenses and subject to tracking error, by investing in the same securities in broadly the same proportion as the index.
The index it follows is built to give exposure to India's commercial real estate through two kinds of listed securities:
Real Estate Investment Trusts (REITs) listed on the exchange, which own and operate income-generating commercial properties such as office parks and retail assets
Real estate companies classified under residential and commercial projects that earn more than 10% of their revenue from rental income
Under the index methodology, REITs together carry a minimum weight of 65%, each security is capped at 20%, and the index is reviewed and rebalanced periodically. Because the fund replicates this index, it holds at least 95% of its assets in the index's securities, with a small balance in debt and money market instruments for liquidity. It is benchmarked against the BSE REITS and Commercial Real Estate Index (TRI).
What is HDFC BSE REITS and Commercial Real Estate Index Fund
At its simplest, this is a mutual fund that lets you invest in a ready-made basket of securities providing exposure to India's commercial real estate by mirroring the BSE REITS and Commercial Real Estate Index.
An index fund is a passive fund: instead of a fund manager choosing what to buy and sell, it simply aims to hold the same securities as the index it tracks, in the same proportion, so its returns move closely in line with the underlying index
A Real Estate Investment Trust, or REIT, is a listed entity that owns and manages rent-generating property and is required to pass on most of its rental income to unitholders, which is how this fund has the potential to offer a mix of regular income and long-term capital appreciation without you having to buy, finance or manage commercial property yourself.
The BSE REITS and Commercial Real Estate Index provides access to this opportunity by combining a ~65%/35% mix of listed REITs and realty companies involved in commercial real estate.
Who can consider HDFC BSE REITS and Commercial Real Estate Index Fund
This fund may suit investors who:
Want exposure to India's commercial real estate without the large ticket size or administration of owning property directly.
Wish to allocate beyond conventional equity and debt, and are comfortable with a passive, index-tracking approach.
Can stay invested across a full property cycle, typically five years or longer.
Understand that any income distributions are variable and not assured.
