New Delhi, April 30 -- In its latest consultation paper, the markets regulator has proposed loosening investment caps so that mutual funds can channel more money into listed real estate and infrastructure trusts (REITs and InvITs). The intent is clear: attract long-term capital and give fund managers more room to manoeuvre.

But, timing is the issue. These instruments are still battling low investor interest, a thin pipeline, and shallow liquidity. With mutual funds currently investing less than 0.3% of total assets in REITs and InvITs, the proposal to raise the cap from 10% to 20% may be trying to fix a problem that hasn't shown up yet.

Also read: Mint Explainer: What Sebi's proposals for REITs, InvITs mean for investors

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