STABLE INCOME INVESTMENT ALTERNATIVE WITH POWERGRID LEADING THE CHARGE

Traditional bank fixed deposit, post office, and government bond investors have now an alternative investment avenue in InvITs. Indian Infrastructure Investment Trusts or InvITs are listed on the stock exchanges offering liquidity and higher returns compared to other traditional similar categories of investment. They have gained credibility and popularity as an investment avenue in recent years as they allow individual and institutional investors to invest in infrastructure assets such as roads, power transmission, and renewable energy projects.

- RAJIV KAPOOR

Some of the key factors to consider in evaluating the listed InvITs are they offer stable cash flows and provide a regular income stream which is very important for any investor. Since they typically invest in operational infrastructure projects, this generates a steady income through long-term contracts or agreements such as toll roads, power transmission lines, and renewable energy assets. Hence, Investors benefit from regular dividends and interest income as InvITs are required to distribute at least 90% of their income to unit holders. While the current yields from InvITs range between 7-9%, it actually depends on the quality of their assets and market conditions. While they are generally less volatile than stocks, InvIT prices are still subject to market movements, especially in response to interest rate changes, inflation, and regulatory developments. Because InvITs are governed by SEBI regulations, it provides a certain level of transparency and protection for retail investors plus the mandatory distribution of income and the cap on debt levels add an extra layer of security to their Investment. Investment risks are that Rising interest rates can negatively affect InvITs because higher rates may increase borrowing costs for these trusts reducing their profitability. Infrastructure projects are often subject to regulatory and political risks such as changes in toll policies, tariffs or land acquisition rules which can impact cash flows.