Why Are Multi Asset Funds Increasing Exposure to REITs and InvITs?

Multi Asset Allocation Funds are increasingly allocating a portion of their portfolios to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), as fund managers look to diversify beyond traditional asset classes such as equities, debt, and gold. 

Several multi-asset schemes either increased or maintained meaningful exposure to REITs and InvITs over the past year, highlighting the growing acceptance of these alternative investment avenues within diversified portfolios. 

WhiteOak Capital Leads in REIT and InvIT Allocation 

Among the schemes tracked, WhiteOak Capital Multi Asset Allocation Fund had the highest exposure to REITs and InvITs. 

The fund allocated 15.6% of its portfolio to these instruments in April 2026, compared to 8.5% a year earlier, marking one of the sharpest increases among its peers. 

Other funds that increased their exposure included 360 ONE Multi Asset Allocation Fund, which raised its allocation to 4.1% from nil a year ago, Invesco India Multi Asset Allocation Fund, which increased its exposure to 3.5% from around 1% at the start of 2026, and Aditya Birla Sun Life Multi Asset Allocation Fund, which raised its allocation to 4.7% from 4.1% a year earlier. 

Schemes Maintaining Meaningful Exposure 

Several established multi-asset funds continued to maintain allocations to REITs and InvITs. 

DSP Multi Asset Allocation Fund held nearly 5% of its portfolio in these instruments, while UTI Multi Asset Allocation Fund maintained an allocation of more than 4.2%. 

REITs and InvITs are increasingly being used alongside traditional asset classes as part of broader diversification strategies. 

Why Are Fund Managers Looking at REITs and InvITs? 

REITs and InvITs provide exposure to income-generating assets such as commercial office spaces, warehouses, highways, power transmission networks, and renewable energy projects. 

Unlike conventional equities, these instruments generate cash flows from rental income, toll collections, infrastructure usage charges, and similar revenue streams. A portion of these earnings is distributed to investors. 

For multi-asset fund managers, REITs and InvITs offer an additional source of returns that is not entirely linked to movements in the equity market, helping diversify portfolios across different income streams. 

Some Multi Asset Funds Reduce Exposure in REITs and InvITs  

While several schemes increased allocations, some fund managers chose to reduce exposure to the segment. 

Quant Multi Asset Allocation Fund lowered its allocation to 0.57% from 4.3% a year ago. 

Mahindra Manulife Multi Asset Allocation Fund reduced exposure to 4.4% from 7.5%, while SBI Multi Asset Allocation Fund trimmed its allocation to around 4% from 5.5%. 

The changes highlight varying portfolio strategies among fund managers despite the broader interest in alternative assets. 

SEBI Reclassifies REITs as Equity-Related Instruments 

A key regulatory development for the segment came into effect on January 1, 2026, when the Securities and Exchange Board of India (SEBI) reclassified REITs as equity-related instruments. 

The change is aimed at facilitating greater participation by mutual funds and Specialized Investment Funds (SIFs). 

InvITs, however, continue to be classified as hybrid instruments under the regulatory framework. 

Read More: Sebi Reclassifies REITs as Equity, Boosting Market Participation 

What Are Multi Asset Allocation Funds? 

Multi Asset Allocation Funds are open-ended hybrid mutual fund schemes that invest across at least 3 distinct asset classes, with a minimum allocation of 10% to each asset class. 

These funds are designed to provide diversification by spreading investments across different market segments, helping reduce dependence on the performance of any single asset class. 

Conclusion 

REITs and InvITs are becoming an increasingly important part of multi-asset allocation strategies. While fund managers continue to take varied approaches to exposure levels, these instruments are gradually gaining a larger share in diversified portfolios as India's REIT and InvIT market expands. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.