What counts as a model portfolio, and the rules that come with one

SEBI's Master Circular for Research Analysts, issued 6 February 2026, gives model portfolios their own annexure. If you publish one, or you are thinking about it, the annexure changes what a research report has to contain and adds a line item to your annual audit.

Weightages are the dividing line

A model portfolio is a basket of securities for which the analyst issues a research report recommending the relevant weightage of one or more securities in it. SEBI draws a precise line here. A summary or consolidated list of recommended securities with no weightages attached is not a model portfolio at all.

The factsheet

A model portfolio has to be issued as a research report, and it carries its own factsheet. The annexure asks for the disclosures that apply to any research report, plus the rationale for the portfolio, its methodology, the date it launched, the date it was last updated, and its type.

Methodology and a name that means what it says

The methodology section does two things. It defines the universe or theme the stock selection draws from, whether that is large-cap, a single sector or a thematic basket, and it states the selection approach: fundamental, technical, or something else. The portfolio's name then has to match that description. SEBI calls this true-to-label naming, and it comes with a one-line statement of the theme or objective sitting alongside the name.

Horizon, rebalancing, and telling the client why

Two more fields are mandatory: the investment horizon the portfolio is built for, and how often it gets rebalanced or updated. When a rebalance happens, the analyst has to communicate it to clients along with the reasoning behind the change. A portfolio reweighted without a word to the people holding it falls short of the annexure regardless of how sound the reasoning was.

Benchmarking is not optional

Performance has to be benchmarked against a relevant index, applied consistently rather than swapped out to flatter a good quarter. An auto sector portfolio gets measured against the Nifty Auto Index, in years the sector does well and in years it does not. SEBI has also set up an arrangement for an independent agency to verify that benchmarking once it is operational. We have not read the interim arrangements for that agency closely enough to describe how they work day to day, so we confirm the current position at scoping rather than guess at it here.

Risk disclosures are mandatory alongside all of this, and none of it sits outside the compliance audit that already applies to the rest of your practice. The regulation 25(3) annual audit covers model portfolio compliance the same way it covers everything else a Research Analyst does.