India’s first REIT index fund to launch in August: Should you invest in it?
In the last one year, while the Nifty 50 Index has delivered a negative return of around -2% (as of 30 July), the individual REITs have done well. The individual REITs have delivered returns ranging from 8% to 19%, depending on which individual REIT an investor bought. However, an individual needs to have the expertise to select which REIT to invest in. Also, if an individual wished to invest in a basket of REITs, no mutual fund scheme was available.
However, this will change with the launch of India’s first REIT index fund in August. In this article, we will explore what the REIT index fund has to offer and whether you should invest in it.
Nifty REITs and Realty Index
Before we look at the mutual fund offering, let us understand the Nifty REITs and Realty Index, which is the benchmark index for the mutual fund scheme. The Nifty REITs and Realty Index tracks the performance of 15 stocks comprising REITs and real estate stocks. The five listed REITs have a 60% weightage, and the 10 real estate stocks have a 40% weightage. As more REITs get listed and included in the index, their cumulative weightage will increase and eventually reach 100%.
The weight of each security in the index is based on free float market capitalisation, subject to a cap of 15%. It is reconstituted and rebalanced quarterly. The index has delivered a total return of 5.03% over the last one year, a 19.10% CAGR in the last three years, and 17.58% CAGR since its inception (1 July 2021). The index provides a 3.35% dividend yield. The top 10 constituents of the index are as follows.
| Company’s name | Weight |
|---|---|
| Brookfield India Real Estate Trust | 15.99% |
| Embassy Office Parks REIT | 15.11% |
| Nexus Select Trust | 13.87% |
| Knowledge Realty Trust | 7.92% |
| DLF Ltd. | 7.69% |
| Mindspace Business Parks REIT | 7.40% |
| Phoenix Mills Ltd. | 7.03% |
| Lodha Developers Ltd. | 5.12% |
| Prestige Estates Projects Ltd. | 5.10% |
| Godrej Properties Ltd. | 4.88% |
Note: The above data is as of 30 June 2026.
Edelweiss Nifty REITs & Realty Index Fund
Edelweiss Mutual Fund will be launching the Edelweiss Nifty REITs & Realty Index Fund in August 2026. It is India’s first REIT index fund. The New Fund Offering (NFO) will be open from 5 to 19 August 2026. The investment objective of the scheme is to generate returns that are in line with the performance of the Nifty REITs & Realty Total Return Index, subject to tracking errors.
A REIT mutual fund provides investors with various benefits, such as access to real estate at low cost, diversification, and liquidity. In India, as of July 2026, there are only six listed REITs with a $19 billion market capitalisation compared to 196 listed REITs in the US with a $1.42 trillion market capitalisation. In the future, as more REITs get listed in India, they will get included in the Nifty REITs & Realty Index. The mutual fund investor will get exposure to them through the index fund.
As per the Edelweiss MF presentation, the six listed REITs in India own commercial properties worth ₹3.1 lakh crore (GAV – Gross Asset Value). However, their market capitalisation is only ₹2.1 lakh crore, which is a 32% discount to the GAV. The REITs offer a pre-tax yield of 5-7%. So, there is room for growth, along with providing a steady income to investors.
Let us look at how the 6 REITs have performed since their listing.
Source: Edelweiss Mutual Fund
Let us now look at the calendar year performance of the Nifty REITs and Realty Index as compared to the Nifty Realty Index and REITs.
| Year | Nifty REITs and Realty Index | Nifty Realty Index | REITs (Total Returns) |
|---|---|---|---|
| 2021 (Jul – Dec) | 25.20% | 41.60% | 12.00% |
| 2022 | 1.00% | -10.50% | 6.10% |
| 2023 | 28.90% | 82.00% | 6.80% |
| 2024 | 25.50% | 34.80% | 18.60% |
| 2025 | 9.10% | -16.30% | 32.60% |
| 2026 (Till 23rd July) | 4.50% | 1.10% | 5.40% |
Source: Edelweiss Mutual Fund
Taxation of REIT mutual fund
From a tax perspective, a REIT mutual fund is categorised as an equity fund. Hence, the capital gains on a REIT fund will be taxed as follows.
Short-term capital gains
When the REIT fund units are sold within 12 months, the capital gains are categorised as short-term capital gains (STCG). The STCG is taxed at 20%.
Long-term capital gains
When the REIT fund units are sold after 12 months, the capital gains are categorised as long-term capital gains (LTCG). LTCG of up to ₹1,25,000 in a financial year is exempt. The incremental LTCG is taxed at 12.5% (without indexation benefits).
For an investor, the taxation of a REIT mutual fund is more favourable compared to investing in a REIT directly. There is no TDS on the interest and dividend income received by a REIT mutual fund. For individual investors, the interest and dividend income is subject to a 10% TDS at the time of distributions. The interest and dividend income received by a REIT mutual fund is not taxed at the fund level. For individual investors, the interest and dividend income is taxed at the individual’s slab rate.
Should you invest?
The Edelweiss Nifty REITs & Realty Index Fund provides investors the opportunity to invest in a basket of listed REITs and real estate companies. As more REITs get listed and are included in the index, investors will gain broader and more diversified exposure to REITs.
Investing in REITs through an index fund provides a tax-efficient route, especially for investors in higher tax brackets. For direct investors, the distributions (DPUs) are taxed at the slab rate, impacting the post-tax returns of investors in the high tax brackets.
If you want exposure to REITs, instead of investing directly, you can invest through a REIT mutual fund. A REIT mutual fund provides you with exposure to a diversified basket of REITs, with quarterly rebalancing, in a tax-efficient manner.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached on LinkedIn.
