By buld_online 
As fixed deposit (FD) interest rates continue to slide in response to the Reserve Bank of India’s recent rate actions, investors are increasingly turning to alternatives like Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) for better yields. According to Ionic Wealth, these instruments are delivering significantly higher income, often in the range of 6% to 14%, making them appealing for those seeking stable, tax-efficient cash flows.
Last week, the RBI cut the repo rate by 50 basis points to 5.5% in a bid to tackle inflation. But the move has compounded the woes of conservative savers. With a total of 100 basis points shaved off in 2025 so far, banks are now trimming FD rates across the board. SBI research shows that FD interest rates have fallen between 30 to 70 basis points since February, with short and medium-term tenures hit the hardest. For instance, a drop from 7% to 6.5% on a one-year Rs 10 lakh FD means Rs 5,000 less in annual returns.
With returns on traditional deposits likely to hover around or even below 7%, fixed-income investors are being urged to reassess their strategies. While FDs still hold value for capital preservation, diversifying into instruments like REITs and InvITs could offer significantly better income prospects without entirely giving up on safety.
REITs and InvITs: What they offer
REITs let investors gain exposure to commercial real estate like office parks and malls, while InvITs provide access to infrastructure assets such as toll roads and power grids. Both instruments pay regular distributions derived from cash flows, and since they’re listed on stock exchanges, they offer liquidity and transparency—unlike traditional real estate or infra investments.
Why investors are tuning in
Low minimum investment: REITs and InvITs can be accessed with relatively small capital, making them ideal for retail investors.
Liquidity: Since these units trade on stock exchanges, investors can enter or exit with relative ease.
Transparency: Net Asset Values (NAVs) are disclosed regularly, giving investors clear visibility into performance.
Regulatory oversight: Both are governed by SEBI, ensuring structured compliance and reporting standards.
For those looking to build a steady income stream with tax efficiency, Ionic Wealth believes these instruments offer meaningful opportunities—especially when chosen with care.
High-yield performers
PowerGrid InvIT: Yielded 14.6% over the past year, thanks to its annuity-based transmission assets.
IRB InvIT: Provided 14.04% returns, backed by toll-operating road projects.
Capital Infra Trust: Delivered 14.3% yield with robust payouts.
IndiGrid InvIT: Offered a 10.15% yield alongside a 13.3% price gain.
Indus Infra Trust: Yielded 8.42% with modest capital appreciation.
Among REITs:
Brookfield REIT: Topped total returns at 26.5%, driven by a 6.3% yield and 20.2% price surge.
Mindspace REIT: Gave a 5.07% yield with a 15.4% gain, totaling 20.5%.
Embassy REIT: Delivered a total return of 16.3% with a 5.8% yield.
Nexus Select Trust: Yielded 6.15% while appreciating by 6.9%.
Property Share Platina REIT: A niche pick, it posted the lowest yield at 2.32% and a negative return overall.
What investors should note
With FD yields softening amid the RBI’s rate-cut cycle, the appeal of REITs and InvITs has grown stronger. These instruments not only offer higher income potential but also provide liquidity, diversification, and regulatory oversight. For conservative investors seeking alternatives in a low-interest-rate world, blending FDs with REITs and InvITs may be the key to maintaining both stability and returns.