Reits rally as Sebi reclassifies them as equity for mutual fund flows

Reits surged after Sebi reclassified them as equity securities for mutual fund investments, a move expected to lift liquidity, expand investor base and attract capital

Shares of real estate investment trusts (Reits) rallied on Monday, reacting to the Securities and Exchange Board of India’s (Sebi’s) Friday decision to reclassify them as equity securities for mutual fund (MF) investments. The move is expected to improve liquidity, expand the investor base, and attract stronger institutional participation, especially from MFs.

 

So far, Reits were classified as hybrid securities.

 

"Reits rallied after Sebi reclassified them from the hybrid category to equities, eliminating MF investment caps and aligning them with global benchmarks. The move is expected to attract significant capital inflows, boost institutional participation, and enhance integration into equity-focused strategies, driving a positive market response," said Vinod Nair, head of research, Geojit Investments.

 

Brookfield India Real Estate Trust gained the most, rising 4.7 per cent. Mindspace Business Parks REIT advanced 3.9 per cent, Nexus Select Trust climbed 3.7 per cent, while Embassy Office Parks REIT added 2.7 per cent.

 

The equity tag opens scope for their inclusion in equity indices and greater presence in active equity and hybrid schemes.

 

While MFs were allowed to invest in Reits and infrastructure investment trust (Invits) back in 2017, only a fraction of the fund houses have warmed up to the real estate and infrastructure investment vehicles. As of March 2025, only 12 of the 46 fund houses had some exposure to Reits and Invits through their schemes.