‘Investors should check credentials of the fund house before investing in REMFs’

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Milind Barve, managing director, HDFC Mutual Fund, was one of the key members of the team which has given final shape to the recently announced regulations by Securities and Exchange Board of India (Sebi) on Real Estate Mutual Fund (REMF). In an exclusive interview to Sai Prasan of The Financial Express, Milind Barve spoke on issues ranging from various features of REMF, NAV calculations of the schemes to the difference between investing in physical real estate and units of REMF. Excerpts:

How do you think, the introduction of the Real Estate Mutual Fund (REMF) will benefit investors, the MF industry, and the real estate sector?

Let us first talk about the investors. If a retail investor wants to invest in real estate, then it takes several lakh rupees to buy a house. But, with the introduction of REMF, small investors can invest a minimum of Rs 10,000 or more in the REMF and have real estate as an asset class in their portfolios.

As far as MF industry is concerned, it helps fund houses to get a part of the savings of money which can be managed in a transparent manner. Globally, the portion of the real estate as an asset class is a significant portion of the total saving component. It is not the same in India. So, real estate investments will grow at it’s a pace, with the introduction of REMF regulations. The guidelines have covered very exhaustively all the aspects on REMF. A very strong risk management mechanism is in place. However, the investor irrespective of its size big or small-- should be cautious while investing in the REMF. They should look at the track-record of the fund house offering the scheme before investing in REMF.

How different is Real Estate Infrastructure Trust (REIT) than REMF?