These guidelines mandate that Research Analysts provide structured, transparent model portfolios with specific weightages, clear methodologies, risk disclosures, and benchmarked performance.

Research Analyst or research entity recommending the model portfolio shall ensure compliance with the following guidelines on ‘model portfolio’:
1. Definitions
The following terms used in the guidelines on the ‘model portfolio’ shall have the meaning as mentioned below. i. Model Portfolio: A ‘model portfolio’ shall mean a basket of securities for which a research report is issued by a RA recommending the relevant weightages for one or more securities mentioned therein.
Explanation: If the research report does not ascribe weightages to the components of basket of securities, then merely a summary or consolidated presentation of securities recommended shall not be regarded as a “model portfolio”. ii. Disclosures: Means the minimum set of disclosures as specified in this model portfolio framework to be mandatorily included in a model portfolio report, in order to ensure that all the relevant facts and information which could impact the investment decision of a potential investor are adequately made known to the investors.
iii. Launch Date: Means the date on which model portfolio report was issued by the RA.
iv. Update Date: Each model portfolio should clearly list the dates and/or intervals at which model portfolio shall be reviewed and updated by RA and the launch date of each such updated model portfolio shall be deemed to be the “Update Date”.
2. Model Portfolio Framework
i. Model portfolio report: Model portfolio shall be issued through a research report with all constituent securities being recommended to be covered in the research report and rebalancing to be done at such intervals as the RA deems appropriate. The opinion of the RA on any constituent securities forming part of the model portfolio shall not be contrary to its opinion on each of such securities individually.
Model portfolio report shall include a ‘factsheet’ setting out the basic information on the model portfolio. A model portfolio report must contain disclosures, rationale, methodology, launch date, update date and type of model portfolio contained therein.
ii. Methodology: Model portfolio report shall define and discuss the framework including underlying universe for stock selection and shall be labelled to indicate the type of underlying universe of securities (such as large caps, mid-caps, multi caps, etc.) or an underlying theme (such as Make in India, Defence, etc.) or a sector (such as Auto, Textile, etc.). Model portfolio report shall define and discuss in detail the methodology for selection of constituent securities in the model portfolio such as fundamental analysis, technical analysis etc. and the parameters therein.
iii. Labelling: Model portfolio should be ‘true to label’ and should be named in a manner which clearly states the type of portfolio being created along with a one-line description of the theme or investment objective of the model portfolio for ease of understanding for all clients.
iv. Investment Horizon: Model portfolio report should specify the investment horizon of the model portfolio so that the investor can match that to their investment period.
v. Frequency of portfolio review and update: Whether the model portfolio would be updated and at what intervals must be predefined in the report. The rebalancing, if any, of the constituent securities in the model portfolio shall be done within the overall framework of the model portfolio and shall be communicated to the clients along with the underlying rationale.
vi. Risk disclosures: Model portfolio risk should be clearly mentioned in model portfolio report.
vii. Benchmarking: Each model portfolio shall disclose performance duly validated by agency/body as specified by SEBI over different time periods, and should be benchmarked with appropriate and relevant index.
For example, Model portfolio for auto stocks can be benchmarked with Nifty Auto Index, Mid cap model portfolio can be benchmarked with BSE Midcap Index, thematic portfolios with thematic indices, etc.
Every model portfolio report shall contain disclosure on the benchmark index which should be clearly defined and should be used consistently.
viii. Audit Requirements: Compliance with audit requirement under regulation 25(3) of the RA Regulations shall also cover compliance with obligations set out under the model portfolio guidelines.