NEW DELHI: The market regulator, Sebi, announced on Friday that Real Estate Investment Trusts (REITs) will now be classified as equity-related instruments to encourage greater involvement from mutual funds and specialized investment funds (SIFs).
Additionally, the classification of Infrastructure Investment Trusts (InvITs) will remain as hybrid instruments.
Sebi stated in its circular, “Effective January 1, 2026, any investment by mutual funds and SIFs in REITs will be classified as an investment in equity-related instruments.”
Investments in REITs from existing debt schemes and SIF strategies as of December 31, 2025, will be grandfathered. However, asset management companies (AMCs) are encouraged to gradually divest these based on market conditions and investor interest.
The Association of Mutual Funds in India (AMFI) will revise the scrip classification list to include REITs, and AMCs must update their scheme documents accordingly—this change will not be considered fundamental.
Furthermore, REITs can only be integrated into equity indices after July 1, 2026, as per the regulator’s guidelines.
In September, the Sebi board approved revisions to the SEBI (Mutual Funds) Regulations, 1996, reclassifying REITs as “equity” while maintaining the “hybrid” classification for InvITs, specifically for investments by mutual funds and SIFs.
