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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles

Which statement about Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) regulated by SEBI is correct?

REITs and InvITs are SEBI-regulated trusts that pool money to own income-generating real estate or infrastructure assets. Their units are listed on stock exchanges, so investors exit by trading units, and the trusts distribute most of their cash flows to unit holders.

  1. AThey are open-ended and units are redeemed by the trust at NAV on demand
  2. BThey hold no underlying assets and invest only in derivatives
  3. CThey are trusts that pool money to hold income-generating real estate or infrastructure assets and their units are listed on stock exchangesCorrect
  4. DThey are prohibited from distributing income to unit holders

Explanation

REITs and InvITs are trusts holding income-generating real estate or infrastructure assets, with units listed on exchanges, so investors exit by trading rather than redemption. They are required to distribute most of their net distributable cash flows to unit holders, which rules out option D. Option A describes open-ended funds.

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