The Hidden World of REITs & InvITs Inside Indian Mutual Funds

When people think about mutual funds, they usually imagine companies.

HDFC Bank.

Infosys.

Reliance Industries.

Tata Motors.

But hidden inside many mutual fund portfolios is something completely unexpected.

Office buildings.

Business parks.

Highways.

Power transmission networks.

At first glance, it sounds impossible.

How can a mutual fund own a business park or a highway?

The answer lies in two investment vehicles that most retail investors have heard of—but very few truly understand.

REITs and InvITs.

When we analysed mutual fund portfolios using Gajamudra Analytics, we discovered that these assets quietly appear across dozens of portfolios managed by India's leading Asset Management Companies.

The findings were fascinating.

What Exactly Is A REIT?

Imagine you and a group of friends wanted to own a premium office complex.

Buying the entire building individually would be impossible for most people.

A Real Estate Investment Trust (REIT) makes that possible.

Instead of purchasing the building yourself, you buy units of a trust that owns and manages income-producing real estate.

These properties could include:

  • Premium office parks

  • Commercial buildings

  • Shopping centres

  • Warehouses

  • Business campuses

Businesses pay rent to occupy these properties.

A significant portion of that rental income is then distributed to investors.

In simple words...

When a mutual fund invests in a REIT, it is indirectly participating in the income generated by commercial real estate.

It isn't buying an office building.

It's buying exposure to the cash flows generated by that office building.

Then What Is An InvIT?

Now replace office buildings with highways.

Or electricity transmission lines.

Or gas pipelines.

Or renewable energy infrastructure.

That's where an Infrastructure Investment Trust (InvIT) comes in.

The idea is remarkably similar.

Instead of earning rental income from commercial properties...

an InvIT earns revenue from operating infrastructure assets.

That revenue may come from:

  • Highway toll collections

  • Transmission charges

  • Pipeline usage fees

  • Infrastructure service revenues

Just like REITs distribute rental income...

InvITs distribute income generated by infrastructure assets.

Think of it this way.

REITs own places where people work.

InvITs own infrastructure that helps the country work.

REITs Vs InvITs

Although they operate differently, they share one common objective.

They provide investors with exposure to income-generating assets that behave differently from traditional equities.

A REIT focuses on commercial real estate.

An InvIT focuses on operating infrastructure.

For fund managers, both become useful tools when building diversified portfolios.

Which REITs And InvITs Do India's Mutual Funds Prefer?

Once we understood what these investment vehicles were...

the next obvious question was:

Which ones do India's professional fund managers actually invest in?

One name immediately stood out.

Embassy Office Parks REIT appeared in 69 mutual fund portfolios, making it the most widely held REIT in the portfolios we analysed.

That's an extraordinary level of acceptance.

Remember...

Every AMC has its own investment team.

Its own research analysts.

Its own investment committee.

Yet dozens of independent teams reached a similar conclusion.

They believed Embassy Office Parks REIT deserved a place in their portfolios.

It wasn't the only one attracting attention.

Several other trusts also appeared repeatedly.

  • Brookfield India Real Estate Trust was held by 53 funds.

  • Indus Infra Trust (InvIT) appeared in 50 funds.

  • Raajmarg Infra Investment Trust featured in 47 funds.

  • Mindspace Business Parks REIT was held by 22 funds.

  • Embassy Office Parks REIT (NCD) appeared in 21 funds.

  • Cube Highways Trust (InvIT) featured in 16 funds.

  • IRB InvIT Fund appeared in 14 funds.

  • Mindspace Business Parks REIT (NCD) was held by 14 funds.

Looking at this list, one thing becomes clear.

India's fund managers aren't limiting themselves to stocks alone.

They're also allocating capital to income-producing real estate and infrastructure whenever it fits their investment philosophy.

Why Do Fund Managers Buy REITs And InvITs?

If mutual funds can simply buy more companies...

why invest in REITs and InvITs?

The answer lies in portfolio construction.

Imagine building a cricket team.

You wouldn't pick eleven opening batsmen.

A balanced team needs different specialists.

Mutual fund portfolios work the same way.

Equities provide exposure to business growth.

REITs provide exposure to income-generating commercial real estate.

InvITs provide exposure to operating infrastructure assets that generate cash flows through long-term usage.

Different assets.

Different revenue streams.

Different risk characteristics.

By combining them thoughtfully, fund managers can create portfolios that are exposed to more than one source of potential returns.

This doesn't mean REITs or InvITs are replacements for equities.

They simply serve a different purpose inside a professionally managed portfolio.

What Surprised Us Most

Before starting this research, we expected to spend most of our time analysing companies.

Instead...

we found ourselves studying office parks.

Business campuses.

Highways.

Infrastructure trusts.

It was a reminder that mutual fund portfolios are often much richer and more diverse than most investors realise.

Sometimes the most interesting investments are the ones that rarely make headlines.

A Thank You To India's Fund Managers

Every month, India's Asset Management Companies publicly disclose their portfolio holdings.

For most investors, these disclosures are simply compliance documents.

For us, they're an opportunity to learn.

They reveal not just what fund managers invest in...

but how they think about constructing portfolios.

To every investment team that makes these disclosures available—

thank you.

Your research helps investors understand the market in ways that go far beyond returns.

Today's Question

Before reading this article...

Did you know that mutual funds could invest in office parks and infrastructure assets through REITs and InvITs?

🟢 Yes, I already knew.

🟡 No, this was completely new to me.

Tell us in the comments.

And here's another challenge.

Visit Gajamudra and explore the portfolios yourself.

Can you find a REIT or InvIT that didn't make our list?

Or discover another interesting investment hidden inside your mutual fund?

If you do...

share your findings with the community.

Some of the best discoveries from our readers will inspire future Gajamudra Portfolio Snapshot articles.

Join The Gajamudra Community

At Gajamudra, we believe every portfolio tells a story.

Some stories are about companies.

Some are about sectors.

And sometimes...

they're about office buildings, highways and infrastructure that quietly sit inside mutual fund portfolios.

Our mission is simple:

Help every investor understand what they actually own.

Explore complete portfolio holdings.

Compare mutual funds side by side.

Discover hidden investment themes.

Generate detailed portfolio analytics—for free.

Because investing shouldn't stop at knowing your fund's returns.

It should begin with understanding how your money is invested.

Beyond Returns. Understand What You Own.