India's real estate and infrastructure funds offer a good buying opportunity for investors looking for an inflation hedge as the nascent market matures, according to a $44 billion wealth manager backed by Capital.
Co-founder and co-CEO Yatin Shah said in an interview that IIFL Wealth Management Ltd is recommending its clients allocate as much as 10% to the hybrid investments.
To date, the three REITs, which mainly hold commercial office assets, are listed on Indian stock exchanges, with the best performing being Brookfield India Real Estate Trust, which has gained nearly 30% in the past year. The PowerGrid Infrastructure Investment Trust grew 19% year-on-year, compared with a 5.2% gain for the NSE Nifty 50 Index.
Inflation in India hit an eight-year high in April, and the central bank is expected to raise interest rates by 40 basis points, according to a Bloomberg survey of economists.
REITs and invITs provide both regular income and capital gains and provide an extra measure of protection against inflation because contracts can be renegotiated during periods of inflation, according to Shah.