Mutual Funds Boost Exposure to REITs and InvITs Amid Growing Investment Opportunity

Real Estate and Infrastructure Investment Trusts Gain Traction in Mutual Funds

Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are increasingly finding a place in mutual fund portfolios, particularly among multi-asset allocation schemes. These alternative asset classes are being viewed as a way to diversify beyond traditional investments such as equities, debt, and gold.

Portfolio disclosures from Ace Mutual Fund show that several multi-asset funds have either increased or maintained meaningful exposure to REITs and InvITs over the past year. This trend highlights fund managers' growing comfort with these alternative asset classes.

The Multi Asset Allocation Fund is an open-ended hybrid mutual fund that must invest in at least three distinct asset classes, with a minimum of 10 percent allocation in each. Among the notable movers, WhiteOak Capital Multi Asset Allocation Fund had the highest allocation to REITs and InvITs at 15.6 percent in April 2026, up sharply from 8.5 percent a year earlier.

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Several established schemes have also maintained sizeable allocations. Aditya Birla Sun Life Multi Asset Allocation Fund allocated 4.7 percent of its portfolio to REITs and InvITs, up from 4.1 percent a year ago. DSP Multi Asset Allocation Fund held nearly 5 percent in the segment, while UTI Multi Asset Allocation Fund maintained an allocation of over 4.2 percent.

REITs and InvITs provide exposure to income-generating assets such as commercial office spaces, warehouses, highways, power transmission networks, and renewable energy projects. Unlike traditional stocks, these instruments generate regular cash flows from rent, toll collections, or infrastructure usage charges, a portion of which is distributed to investors.

For multi-asset fund managers, REITs and InvITs offer another source of returns that is not entirely dependent on equity market movements. The asset class can help diversify portfolios while providing a relatively stable income stream.

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However, not all fund managers are increasing exposure. Quant Multi Asset Allocation Fund reduced its allocation to 0.57 percent from 4.3 percent a year earlier. Mahindra Manulife Multi Asset Allocation Fund lowered its exposure from 7.5 percent to 4.4 percent, while SBI Multi Asset Allocation Fund trimmed its allocation to around 4 percent from 5.5 percent.

The Securities and Exchange Board of India (SEBI) reclassified Real Estate Investment Trusts (REITs) as equity-related instruments from January 1, 2026 to facilitate greater participation by mutual funds and Specialized Investment Funds (SIFs). Infrastructure Investment Trusts (InvITs), however, will continue to be categorized as hybrid instruments.

As India's REIT and InvIT market continues to expand and new investment vehicles come to market, these instruments are likely to play a growing role in how multi-asset funds seek diversification, income, and long-term portfolio stability.