Exploring New Investment Horizons: AIFs, REITs, INVITs, SGBs, Bonds, and NCDs

In this vital world of finance, there are so many options other than stocks and mutual funds. Let’s get a brief knowledge of various available options in today’s time like AIFs, REITs, INVITs, SGBs, Bonds, and NCDs.

Alternative Investment Funds (AIFs)

This helps you diversify your normal assets into a fund that helps the venture get capital from venture capitalists or angel investors. That will give you an opportunity to be a private equity/hedge fund investor. Though it has the potential for higher returns, it also comes a high level of risk. This investment will yield a return in the long term with a high growth rate.

Real Estate Investment Trusts (REITs)

This investment is done for the income that is generated from real estate. Here, the income for the investor will be from the property that is given on lease or rent. There is no direct investment in the construction of buildings; it is less risky. It provides a dividend yield, and the capital appreciation gives a good proportion of income orientation to the investors.

Infrastructure Investment Trusts (INVITs)

This vehicle for investment focuses on infrastructure development in India like roads, bridges, airports, etc. This investment is in the operation of the construction. This direct type of investment has comparatively higher risk than REITs. The trust gets capital from all the investors, and in return, they get a dividend and long-term capital appreciation. Their risk includes delays in projects or any change in regulations by the government.

Sovereign Gold Bonds (SGBs)

SGBs offer digital gold for investment. This gold is issued by the government. It gives a fixed interest income to the person every year and it is also tax free. SGBs are a safe and easy way to invest in precious commodities like gold. It also offers protection against market volatility and the purity of the gold. At the maturity of a fixed time period, a person gets the current value of gold, so it is a less risky and safer investment for the public.

Bonds

Bond is a type of fixed-income investment that helps to give fixed returns that are pre-decided. These are issued by the government bodies. This gives investors regular interest payments and a principal amount at maturity. Bonds come under the debt market so it doesn’t give as much return as stock. It helps to diversify the portfolio.

Non-Convertible Debentures (NCDs)

This is a type of debt instrument issued by the corporation. But it doesn't offer the debenture to convert it into equity. It has a predetermined interest rate and fixed maturity period. This has a low-interest rate but provides a steady income.

Thank you.

Regards,

Mahek Sanghvi,

Kautilya, IBS Mumbai.