Reclassification of Real Estate Investment Trusts (REITs) as equity related instruments for facilitating enhanced participation by Mutual Funds and Specialized Investment Funds (SIFs)
Summary
SEBI reclassifies Real Estate Investment Trusts (REITs) as equity-related instruments to facilitate enhanced participation by Mutual Funds and Specialized Investment Funds. This change takes effect from January 1, 2026, while InvITs remain classified as hybrid instruments. Existing REIT investments in debt schemes are grandfathered, but Asset Management Companies are encouraged to divest them.
Text
With effect from January 01, 2026, any investment made by Mutual Funds and SIFs in REITs shall be considered as investment in equity related instruments. InvITs shall continue to be classified as hybrid instruments for the purpose of investments by Mutual Funds and SIFs.
Existing investment in REITs held by debt schemes of Mutual Funds and investment strategies of SIFs as on December 31, 2025, shall be grandfathered. However, AMCs are encouraged to make efforts to divest REITs from respective portfolios of debt schemes considering the market conditions, liquidity and interest of investors.
In terms of para 2.7 of the Master Circular for Mutual Funds dated June 27, 2024, AMFI shall include REITs in the list of classification of scrips as per their market capitalization.
AMCs shall issue an addendum to make necessary changes in the scheme documents and the same shall not be considered as fundamental attribute change for the scheme.
Any inclusion of REITs in the equity indices shall be carried out only after a period of six months i.e, July 1, 2026.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 2(1)(ja) of SEBI (Mutual Funds) Regulations, 1996, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Reclassification of Real Estate Investment Trusts (REITs) as equity related instruments for facilitating enhanced participation by Mutual Funds and Specialized Investment Funds (SIFs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.