Mahindra Manulife Asia Pacific REITs FOF: Should you invest?

As per the Ace mutual fund data, this year itself, there has been launch of around 10 Fund of Funds (FoFs) as of 29 September 2021. These mutual funds invest in both domestic and international funds at the asset management company’s discretion, which increases the diversification for such schemes. Fund of funds mutual funds (MFs) have portfolios with varying degrees of risk, depending on the manager’s primary objective.

If the portfolio manager’s primary objective is to earn the largest returns possible, mutual funds with a larger NAV will be pursued, even if they carry a higher degree of risk. However, if the primary objective is stability, the pool of financial resources obtained will be used to acquire low-risk securities.

When it comes to FoFs-overseas, the returns as per the Ace mutual fund over average of 30% in one year period as on 28 September, 2021. (See the table below)

Recently, Mahindra Manulife Investment Management Private Limited – MMIMPL (previously Mahindra Asset Management Company Private Limited) has launched the ‘Mahindra Manulife Asia Pacific REITs FOF,’ an open-ended fund of fund scheme investing in the Manulife Global Fund – Asia Pacific REIT Fund (the Scheme). The Scheme is appropriate for investors seeking to diversify their portfolios and exposure to international real estate markets.

Fund strategy

Mahindra Manulife Asia Pacific REITs FOF will invest in the Manulife Global Fund – Asia Pacific REIT fund, which invests primarily in real estate investment trusts (REITs) in Asia Pacific countries.

Due to REITs’ low correlation to other assets act as a portfolio diversifier, potentially enhancing portfolio returns over the medium to long term. The underlying fund, Manulife Global Fund – Asia Pacific REIT Fund, will invest between 70% and 100% of its assets in REITs, with the remainder in real estate and property management stocks (non-REITs) and cash/cash equivalents.

Management views

REITs may be one of the primary beneficiaries of the global demand for yield, owing to the expected rebound resulting from the roll-out of Covid-19 vaccinations and economic recovery.

“International REITs are a great way to diversify a portfolio and build exposure to real estate markets worldwide. With strong demand for office spaces, residential, warehousing, retail, and hospitality in Asia Pacific regions, investment in our REIT fund of funds scheme offers an opportunity to investors to grow their wealth over a period. REITs also aims to provide a hedge against inflation,” said Ashutosh Bishnoi, MD & CEO, Mahindra Manulife Investment Management.

What should investors know?

-There is no lock-in period.

-The minimum investment starts from Rs 5,000.

-The total maximum expense ratio permissible is upto 2%.

– 10% of the units allotted will be redeemed without any exit load, on or before completion of 24 months from the date of allotment of units. However, any redemption in excess of the above limit shall be subject to the exit load. An exit load of 1% is payable if Units are redeemed/switched out on or before completion of 12 months from the date of allotment of Units

-The fund falls under the ‘Very High’ risk category, and investors should check with their financial advisers to see the product availability.