InvIT

Full form: Infrastructure Investment Trust

Investments

An InvIT is similar to a REIT but for infrastructure assets -- toll roads, power transmission lines, gas pipelines, and renewable energy assets. Distributes 90% of net distributable cash flows to unit holders. Listed on stock exchanges.

In detail

Indian InvITs:nIRB InvIT Fund: toll roadsnIndiGrid InvIT: power transmission assetsnPowerGrid InvIT: PGCIL's transmission linesnNHPC InvIT: hydroelectric power (upcoming)nnReturns: distribution yield 7-10% + capital appreciation. Total returns comparable to REITs but more correlated to infrastructure regulation and government policy.nnTaxation: distributions taxed based on component breakdown (interest vs dividend vs return of capital). Generally less tax-efficient than REITs.nnMinimum investment: approximately Rs 10,000-15,000 per lot.

Formula

InvIT distribution yield = Annual DPU / Current unit price x 100

Real-life example

🇮🇳 India example

Meena invests Rs 1L in IRB InvIT. Annual distribution: Rs 8,200 (8.2% yield). Unit price appreciates 5% in a year. Total return: 13.2%. She gains exposure to national highway toll road income -- steady cash flows linked to vehicle traffic growth.

Frequently asked questions

InvIT vs REIT -- which is better? ▼

REITs (office/retail real estate) are generally more liquid, better understood, and have cleaner tax treatment. InvITs have more regulatory risk (toll rate changes, power transmission tariff revisions). Both are good for yield-seeking investors. REITs preferred for beginners.