Mahindra Manulife Asia Pacific REITs FoF – NFO Issue Details and Review
Mahindra Manulife mutual funds has launched Asia Pacific REIT FoF (Fund of Fund) that would open for subscription on 28th September 2021. This fund would invest in existing Manulife Global Fund – Asia Pacific REIT Fund (international REIT). REITs – Real Estate Investment Trusts would manage high value real estate property portfolio. This is a high risk business. Should you invest in Mahindra Manulife Asia Pacific REIT FoF? What are the risk factors in such REIT mutual fund scheme?
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What are REIT’s in India?
Real Estate Investment Trusts (REITs) would manage the portfolio of high value real estate properties. In simple terms, such companies own real estate properties, operates, lease them, finances income generating real estate. Individual investors can participate in such high value real estate properties without buying them directly.
How REITs are comparable with Fixed Income and Equity?
Let’s quickly check how REITs are comparable with fixed income and equity.
Mahindra Manulife Asia Pacific REIT FoF – NFO Issue Details
This is an open-ended mutual fund scheme. Here the NFO issue details.
|Scheme reopens for continuous purchase/sale||22-Oct-21|
|Minimum Lumpsum||Rs 5,000|
|Minimum SIP||Rs 1,000 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||1) Upto 10% of units – Nil
2) Beyond 10% of units < 1 year – 1% exit load
3) Beyond 10% of units between 1-2 year – 0.5% exit load
4) > 24 months – Nil
|Risk||Very High Risk|
|Benchmark||FTSE EPRA Nareit Asia ex Japan REITs Index|
|Fund Manager||Mr. Amit Hiremath and Mr. Amit Garg|
Mahindra Manulife Asia Pacific REIT FoF SID
What is the investment objective of Mahindra Manulife Asia Pacific REIT Fund?
The investment objective of the scheme is to provide long term capital appreciation by investing predominantly 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.
However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|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
|Debt and Money Market Securities||0%||5%||Low to Medium|
How is the performance of Manulife Global Asia Pacific REIT Fund?
Since the new fund scheme would invest in existing fund, let us look at the performance of underlying fund.
Manulife Global Asia Pacific REIT fund was launched in Sep-2018. Means, it has 3 years’ operating history.
This fund generated 1.55% returns in last 3 years.
This fund generated 5% returns in last 1 year.
One hidden factor is that it charges 5% upfront fees beyond 1% management fees which anyways needs to be paid every year. The current NAV is SGD 0.9265 per unit. (Source: Bloomberg)
Why should you invest in such REIT Funds?
Here are a few reasons to invest in such schemes.
1) REITs provide a way for investors to invest in high value properties. This is generally not possible for every investor.
2) REIT market is expected to grow with increased opportunities in APAC region.
Some risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) This REIT FoF invests in existing REIT fund outside India. If we check underlying fund performance, Manulife Global Fund – Asia Pacific REIT was launched 3 years back gave 1.55% returns. Investors should avoid such low return generating investment options.
2) This fund invests up to 5% in debt instruments. This segment has turned to be high risk due to defaults from corporates.
3) This fund would invest international mutual fund schemes which have geopolitical risk and currency risk.
4) You can go through all risk factors indicated in the scheme related documents before investing.
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Should you invest in the Mahindra Manulife Asia Pacific REIT FoF?
Mahindra Manulife Asia Pacific REIT FoF (Fund of Fund) invests in existing REIT Fund outside India. Such underlying REIT fund would invest in high value properties and generate fixed income through lease rent. However, such returns are not fixed. Covid-19 has made people to work from home. We do not know how far such REIT funds would be successful with this concept in the near future. The underlying fund has generated thin returns of 1.55% returns in last 3 years. There is hidden factor that underlying fund charges 5% front load fees (entry fees). It is nowhere indicated whether Mahindra Manulife got any waiver for such front load fees for investments done through this scheme (I could not see in SID). There is nothing exciting about this REIT fund. Investors can avoid such funds as of now.
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Real Estate companies world over are not doing well. You have hit the nail on the head by stating that there is nothing exciting about it.
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