As more people look beyond traditional investment routes like fixed deposits, stocks, or gold, alternative options have caught attention, especially those that offer the potential for steady income without the usual day-to-day involvement.
If you’ve explored new avenues of passive income or portfolio diversification, you’ve likely come across the terms REITs and InvITs. Both these investment vehicles have been gaining ground in India over the past few years, particularly among those looking for medium- to long-term investment ideas that balance income and growth.
Although they may seem similar, there are important differences worth noting and understanding how REITs and InvITs work can help you determine where they might fit in your portfolio.
REITs follow a structured model involving a sponsor, a management company, and a trust. This clear separation of roles brings some transparency and accountability to the structure.
Earnings typically come from rental income and property sales. By regulation, REITs are required to distribute a large portion of their taxable income (around 90 percent) as dividends.
Like REITs, they pool funds from multiple investors, but instead of real estate, the money is used to manage large infrastructure projects like toll roads, bridges, power transmission networks, gas pipelines, airports, and telecom towers.
InvITs are usually set up by sponsors (private equity firms or infrastructure companies) who transfer ownership of operational projects to the trust. In return, the trust issues units to investors, allowing them to earn a share of the returns. Revenue comes from long-term contracts, toll collections, or user fees.
Together, both REITs and InvITs managed total assets worth over $80 billion, indicating a growing interest in these alternatives to traditional investment routes.
First Published: Aug 18, 2025, 15:02
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