REITs become equity from January 1, 2026: ICICI Pru, Invesco, other mutual funds announce change

Several mutual funds houses on Thursday, January 1, 2026, announced the reclassification of REITs as equity-related instruments in their schemes.

The fund houses that made the announcement included ICICI Prudential Mutual Fund, Invesco Mutual Fund, LIC Mutual Fund, Baroda BNP Paribas Mutual Fund, PGIM India Mutual Fund, Aditya Birla Sun Life Mutual Fund, and others.

In a statement, ICICI Prudential Mutual Fund said that any investment made by the schemes in units of Real Estate Investment Trusts (REITs) will be considered as an investment in equity-related instruments.

However, units of Infrastructure Investment Trust (InvITs) will continue to be classified as hybrid instruments.

What will happen to existing REITs held by debt schemes?

ICICI Prudential Mutual Fund said that existing investment in REITs held by its debt schemes as on December 31, 2025, shall be grandfathered.

Further, the definition of ‘Equity related instruments’ shall be revised as follows: "equity related instruments include convertible debentures, convertible preference shares, warrants carrying the right to obtain equity shares, equity derivatives, units of Real Estate Investment Trust and such other instrument as may be specified by the Board from time to time," the AMC said.

What other Mutual Funds said

Invesco Mutual Fund also said that with effect from January 1, 2026, investments by its schemes in REITs will be considered as equity-related investment

PGIM India Mutual Fund said the following provisions shall stand revised in scheme documents effective from January 01, 2026: 1) Definition - Equity related instruments, 2) Asset Allocation Pattern 3) Risk Factors."

LIC Mutual Fund said: "In accordance with SEBI notification no. SEBI/LAD-NRO/GN/2025 /272 dated October 31, 2025 and SEBI Circular dated November 28, 2025, related to ‘Reclassification of Real Estate Investment Trusts (REITs) as equity related instruments for facilitating enhanced participation by Mutual Funds and Specialized Investment Funds (SIFs)’, LIC Mutual Fund has informed that some provisions shall stand revised in the SID and KIM of various schemes of the fund effective from January 01, 2026."

Baroda BNP Paribas Mutual Fund said, "...pursuant to SEBI circular no. HO/24/13/12(1)2025-IMD-POD-2/I/157/2025 dated November 28, 2025, related to ‘Reclassification of Real Estate Investment Trusts (REITs)’, any investment made by Mutual Funds in REITs shall be considered as investment in equity related instrument for the purposes of SEBI (Mutual Funds) Regulations, 1996, effective January 01, 2026. The changes shall be made effective from January 1, 2026 in the SID / KIM of the schemes."

Aditya Birla Sun Life Mutual Fund said the following changes will be carried out in its schemes from Thursday, January 1, 2026:

• Any investment made by the schemes in units of REITs shall be considered as investment in equity-related instruments.

• Units of Infrastructure Investment Trust (InvITs) shall continue to be classified as hybrid instruments for the purpose of investments by the Schemes.

"Accordingly, relevant sections of the SID and KIM of Schemes will be amended suitably to reflect the regulatory changes. The provisions earlier applicable to REITs and InvITs shall continue to apply to InvITS. Additionally, the following common risk factors associated with investment in units of REITs will now form part of the scheme specific risk factors, wherever applicable: Market risk, Liquidity risk, Reinvestment risk, and Interest rate risk," Aditya Birla Sun Life Mutual Fund said.