Investments can be risky because of the volatility of the stock market. However, specific types of investments are almost risk-free and consistent in providing a steady income. These investments are called Infrastructure investment trusts or InvITs.

InvITs, which function similarly to mutual funds, are regulated by the Securities and Exchange Board of India. The capital is pooled from multiple investors who receive units as payment for their investments. The funds collected by InvITs are used solely for infrastructure.

In India, InvITs have a pivotal role to play in the operational and maintenance aspect of infrastructure. If you have ever wondered where the money for the construction and maintenance of roads, power plants, highways, and other infrastructure comes from, the answer is InvITs.

InvITs are essentially income-generating assets with a consistent cash flow. 90% of this cash flow must be distributed among the contributing investors as dividends. Infrastructure investments are similar to Real Estate Investment Trusts or REITs. The only difference is that the latter refers to an entity that owns and oversees real estate operations.

The 5 InvITs you can invest in

InvITs can be divided into 5 types based on the kind of infrastructure that they fund, own, and operate. These are as follows -

• Water and Sanitation
• Power distribution
• Transport/Logistics
• Communications
• Social/Commercial infrastructure

InvITs can either be owned privately or listed publicly. In the former, as the name suggests, privately owned InvITs are not available for all to invest in on stock exchanges. Only a certain number of individuals and organizations own these types of InvITs. An InvIT becomes public once it is listed on the stock exchange and can be bought and sold by both retail and institutional investors.

Terms and conditions as per SEBI

As per SEBI mandatory regulations, InvITs come with terms and conditions -

• In completed infrastructure projects, at least 80% of InvITs' total assets must be invested. But this only refers to projects that are capable of producing income. The remaining assets (not more than 20%) can either be in instruments approved by SEBI such as Debt, Equity and Market instruments or under-construction infrastructure projects.
• Bi-annually, at least 90% of an InvITs income should be given as dividends to unitholders.

In India, there are 15 SEBI-registered InvITs. These investments are a perfect way of getting a steady income especially for those retired. However, it is advisable to do some proper research, weigh the pros and cons and be aware of any associated risks before deciding to invest.