ING Investment Management, the investment management arm of ING Investment Management Asia Pacific, is planning to launch a fund that will invest in REITs (real estate investment trusts) abroad.
The investment will be made through ING Clarion real estate, which is the real estate fund arm of the company and is soon going to open an office in India. It has assets under management worth $138 billion.
The fund will also invest in listed real estate securities and charge an entry load similar to other mutual funds. The fund house is awaiting the SEBI’s approval to offer the product to Indian investors.
While norms for real estate mutual funds are still awaited, ING will be the first one to launch an overseas investment product that will invest in REITs. In September this year, the market regulator had widened the window for mutual funds to invest overseas, by including asset classes such as REITs, ADRs and GDRs.
The reason behind launching such a product is diversification, said Vineet Vohra, MD & Chief Executive Officer, ING Investment Management India, “Investors have been totally mesmerised by the frenzy in stock markets. Nobody wants to miss this bull run.The euphoria has made the most wary investors take a chance and plunge into risky situations. But there are phases of every market and this bullishness is not going to be there forever. Real estate has proved to be a great tool for portfolio diversification and risk reduction.”
The fund house is underweight on US and overweight on Hong Kong, Japan, Australia and China. According to ING, 15 per cent allocation to real estate increases returns by 0.96 per cent at same levels of risk.The general returns given by REITs have been 7-8 per cent.
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