Mutual funds
Mutual funds invest across equities, debt instruments, or a combination of both. They are widely used by investors looking for diversified exposure to financial markets.
“Mutual funds work well for investors who want market-linked returns and liquidity for short- to medium-term goals,” says NS Venkatesh, CEO, Bharat InvITs Association.
However, their value can swing sharply due to economic conditions and stock market movements.
InvITs
In contrast, InvITs invest in income-generating infrastructure projects such as highways, power transmission networks, telecom towers, and renewable energy assets. They hold operational, revenue-generating assets that are typically secured by long-term contracts.
“InvITs distribute about 90% of their net distributable cash flows to unitholders, offering predictable and tax-efficient payouts,” Venkatesh explains.
Unlike traditional mutual funds, InvITs offer direct exposure to real assets and are seen as a source of steady income with relatively lower sensitivity to daily market volatility.
Listed on stock exchanges, InvITs also offer liquidity and regulatory oversight, making them accessible to both retail and institutional investors.
Which one makes sense?
Mutual funds may suit investors who seek capital appreciation and are comfortable with price fluctuations. They can help build wealth over time but require a tolerance for market ups and downs.
InvITs, on the other hand, may appeal to those looking for consistent income and stability over long periods. They can complement an investor’s portfolio by adding an element of real asset ownership while supporting India’s infrastructure development.
Key takeaway
Both options serve different needs.
“InvITs and mutual funds are not substitutes but complementary tools,” says Venkatesh.
Choosing between them — or combining both — depends on an investor’s time frame, income needs, and risk comfort.
(Edited by : Shoma Bhattacharjee)