Many investors seek to build a well-diversified portfolio spread across asset class. Mutual Fund REITs offer investors with diversification towards real estate related investments in their portfolio and benefit from long-term growth and rising opportunities in the real estate segment. The right asset mix in a portfolio helps to generate better risk-adjusted returns for investors.
Real Estate Investment Trusts (REITs) have unique characteristics that make them attractive to both income and growth investors. REITs are companies that own or finance income producing real estate across a range of property sectors such as residential, industrial, retail, mortgage, hotels etc.
REITs may be used to help provide income in conservative portfolios or long-term growth in more aggressive portfolios. Thus, a small portion of your portfolio may be allocated to REITs.
Notably, ownership of REITs over time has historically increased investors’ total return and/or lowered the overall risk in both equity and fixed income portfolios. International REITs also provide global diversification to the portfolio, and allows domestic investors with an opportunity to invest in worldwide real estate space.
Investors with a high-risk profile may consider investing passively in a fund that aims to benefit from growth potential of REITs in the overseas market.
Mahindra Mutual Fund has launched Mahindra Manulife Asia Pacific REITs Fund of Fund. It is an open-ended fund of fund scheme investing in Manulife Global Fund – Asia Pacific REIT Fund. The Manulife Investment Management has 90+ years of investment experience in property investment/ asset & property management.
On the launch of this fund, Mr Ashutosh Bishnoi MD and CEO of Mahindra Manulife MF said, “The NAV of the FoF for the Indian investor will show the rupee value. So, domestic investors will also gain from the currency fluctuations as and when dollar strengthens against the rupee.”
Table 1: Details of Mahindra Manulife Asia Pacific REITs FoF
|An open-ended fund of fund scheme investing in Manulife Global Fund – Asia Pacific REITs Fund.
|Fund of Fund (Overseas)
|The investment objective of the Scheme is to provide long-term capital appreciation by investing predominantly in units of Manulife Global Fund – Asia Pacific REITs Fund, an overseas fund primarily investing in real estate investment trusts (REITs) in the Asia Pacific ex-Japan region. However, there can be no assurance that the investment objective of the Scheme will be achieved.
|Rs 5,000/- and in multiples of Re 1/- thereafter. Additional Purchase Rs 1,000/- and in multiples of Re 1/- thereafter.
|Rs 10/- per unit
|Mr. Amit Hiremath
Mr. Amit Garg
|FTSE EPRA Nareit Asia ex Japan REITs Index
|September 28, 2021
|October 12, 2021
(Source: Scheme Information Document)
The investment strategy for Mahindra Manulife Asia Pacific REITs FoF will be as follows:
Mahindra Manulife Asia Pacific REITs FoF will predominantly invest in units of Manulife Global Fund – Asia Pacific REIT Fund, an overseas fund primarily investing in real estate investment trusts (REITs) in the Asia Pacific ex-Japan region.
The underlying scheme Manulife Global Fund – Asia Pacific REIT Fund includes investment in assets such as industrial parks, data centres, healthcare centres, offices, retail malls and hotels across Asia pacific region. This scheme will aim to track the performance of the underlying scheme and generate returns corresponding to the returns of underlying scheme with minimum tracking errors.
Being a fund of fund, it will be passively investing in the overseas mutual funds / unit trusts within the investment pattern, thus allowing Indian investors to diversify their risk from a single country and single currency investment.
The investment made in the underlying fund will be based on the subscriptions and redemptions received in the scheme and within the overall limits specified by SEBI/RBI.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation of Mahindra Manulife Asia Pacific REITs FoF
|Indicative Allocation (% of net assets)
|Units / shares of Manulife Global Fund – Asia Pacific REIT Fund, an overseas fund primarily investing in real estate investment trusts (REITs) in the Asia Pacific ex-Japan region. ^
|Medium to High
|Debt and Money Market Securities (including TREPS (Tri-Party Repo), Reverse Repo) and/or units of liquid schemes
|Low to Medium
^Investors are requested to note that shares of Manulife Global Fund – Asia Pacific REIT Fund, should be considered as units of the Fund.
(Source: Scheme Information Document)
Who will manage Mahindra Manulife Asia Pacific REITs FoF?
Mr Amit Hiremath (for overseas investments) and Mr Amit Garg (for debt portion) will be the dedicated fund managers for this scheme.
Mr Amit Hiremath is a Research Analyst – Equity at Mahindra Manulife Investment Management Pvt. Ltd. His qualifications include MBA and B. Pharma, and has over 11 years of experience in financial services industry. Prior to this, he was associated with Anand Rathi Advisors Ltd. as Assistant Vice President – Equity, B&K Securities as Research Analyst and Enam Asset Management Company Pvt. Ltd. as Vice President. Currently, there are no other schemes under his management.
Mr Amit Garg is an Assistant Fund Manager – Fixed Income at Mahindra Manulife Investment Management Pvt. Ltd. He is a CFA, B.Com graduate and MMS Finance, he has over 11 years of experience in financial services industry. Prior to this, he was working as Dealer – Fixed Income, MMIMPL, Dealer – Fixed Income with Mahindra & Mahindra Financial Services Limited and Junior Fund Manager & Dealer with Daiwa Asset Management (India) Pvt. Ltd.
Fund Outlook – Mahindra Manulife Asia Pacific REITs FoF
Mahindra Manulife Asia Pacific REITs FoF aims to invest in the units of underlying scheme — Manulife Global Fund – Asia Pacific REIT Fund and closely track its performance. The underlying scheme aims to capture the potential recovery of economies on the back of roll-out of covid-19 vaccines.
This scheme offers investors an opportunity to passively invest in REITs across the Asia pacific ex- Japan region. The REITs space is expected to grow in near term with rising opportunities in the Asia Pacific region.
However, note that this scheme will be passively managed and it will limit fund managers involvement. The scheme will be indirectly investing a major portion of its portfolio in international real estate markets with the existing REITs fund, which makes it a bit risky proposition.
In addition, due to overseas investments this scheme will be prone to geo-political risk and currency risk. Thus, this scheme is suitable only for investors with a very high risk appetite and a long investment horizon. You must ensure that your investment objectives are well-aligned with the fund.
This article first appeared on PersonalFN here