Investor Corner/The asset classes/Real Assets: REITs, InvITs and Gold
2.5.2 InvITs: Infrastructure Investment Trusts
InvITs, or Infrastructure Investment Trusts, are structured similarly to REITs but focused on infrastructure assets such as roads, power transmission lines and pipelines, offering regular income and diversification.
Infrastructure, made investable
Large infrastructure projects traditionally required either direct government funding or specialised institutional capital. InvITs open this asset class to a broader base of investors by pooling capital to own operational infrastructure assets and distributing the steady cash flows those assets generate, such as toll revenue or transmission fees, back to unit holders.
Why yield, not growth, is the main attraction
Most InvIT assets are mature, already operating infrastructure generating predictable, contracted cash flows, rather than early-stage projects still under construction. This makes InvITs primarily an income oriented investment, with growth typically more modest than what many equity investments aim for.
What to watch for
Because much of an InvIT's income often comes from long-term contracts, regulatory changes affecting those contracts, or changes in the underlying demand for the specific infrastructure held, are worth monitoring. As with REITs, InvIT prices are also sensitive to interest-rate movements given their income-focused nature.
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