The open-ended index fund will seek to replicate or track the performance of the BSE REITs and Commercial Real Estate Index (TRI). The index provides exposure to listed real estate investment trusts (REITs) as well as select listed commercial real estate companies with rental income-linked business models.
Unlike a conventional diversified equity fund, the scheme is designed to provide exposure to the commercial real estate segment through listed securities. Since it is an index fund, the portfolio will be managed with the objective of tracking its underlying benchmark rather than selecting stocks or securities based on the fund manager’s active views.
What does the fund invest in?
The scheme will track the BSE REITs and Commercial Real Estate Index, giving investors exposure to listed REITs and companies linked to commercial real estate and rental income.
REITs provide a way for investors to participate in income-generating real estate assets through listed units, without having to directly buy or manage commercial properties. Their returns can be influenced by factors such as rental income, occupancy levels, property valuations, interest rates and market conditions.
The fund structure allows investors to gain such exposure through the mutual fund route, with investments possible at relatively small amounts compared with directly investing in commercial property.
Why is the index fund format relevant?
The scheme follows a passive investment strategy, meaning its objective is to mirror the performance of the underlying index, subject to tracking error and expenses.
For investors, this means the fund’s returns will broadly depend on how the securities forming the BSE REITs and Commercial Real Estate Index perform. It also means the fund does not provide direct ownership of physical commercial properties.The performance of listed REITs and commercial real estate companies can differ from that of residential property or the broader equity market. However, this does not mean the asset class will necessarily perform differently in every market cycle. Interest rates, economic growth, demand for office and commercial space, rental trends and equity-market valuations can all affect returns.
What should investors keep in mind?
Investors considering the fund should look beyond the real-estate theme and understand the risks associated with the underlying securities. REITs and real estate companies are market-linked investments and their prices can fluctuate.
Interest rates can also be an important factor. Changes in borrowing costs can affect the financing expenses and valuations of real estate businesses and the attractiveness of income-generating assets relative to fixed-income investments.
The index fund therefore provides market-linked exposure to listed commercial real estate, rather than assured rental income or guaranteed returns. As with other equity-oriented market investments, investors should consider their investment horizon, risk appetite and overall asset allocation before investing.
Navneet Munot, Managing Director and CEO, HDFC AMC, said the fund is aimed at providing investors with access to India’s real estate growth opportunity through an index fund format. He also highlighted the fund house’s experience in passive investment strategies.
First Published: Sept 28, 2026 1:05 PM IST