Curated stock baskets are now formally regulated as research services. The disclosure, benchmarking and fee rules that apply — and how to evaluate a basket properly.
Curated stock baskets — buy a themed collection in one click, rebalance when the provider says so — have become a mainstream product. They occupy a genuine gap: more structure than picking stocks yourself, lower minimum than the ₹50 lakh PMS threshold, more control than a mutual fund.
They are also now explicitly regulated, in ways many investors have not noticed. SEBI formalised “model portfolios” as a research service with a specific compliance framework.
What a Model Portfolio Legally Is
SEBI’s guidelines define it precisely: a model portfolio is a basket of securities for which a research report is issued by a Research Analyst recommending relevant weightages for one or more securities in it.
The definition contains an important carve-out. If a research report does not ascribe weightages to the securities, then a summary or consolidated presentation of recommended stocks is not a model portfolio. Weightages are what convert a stock list into a regulated product.
Model portfolio recommendations fall within “research services” under the SEBI (Research Analysts) Regulations, 2014, and Regulation 24(8) requires providers to follow SEBI’s model portfolio guidelines. Compliance was required by 30 June 2025, and adherence is covered in the mandatory compliance audit.
What Providers Must Now Do
The framework — set out in the guidelines issued in January 2025 and consolidated into the Master Circular for Research Analysts of 27 June 2025 — requires that a model portfolio report:
- States its methodology — how securities are selected and weighted
- Is clearly labelled, so it cannot be presented as something it is not
- States the investment horizon
- Is reviewed and updated at predefined intervals, with the rebalancing frequency disclosed upfront
- Includes risk disclosures
- Is benchmarked against an appropriate index for performance comparison
- Includes a factsheet with essential portfolio information
- Is supported by a research report for each constituent security
That last requirement matters more than it sounds. A basket cannot simply be a screener output — each holding needs research behind it.
What Applies to Fees and Terms
Alongside the model portfolio framework, the December 2024 amendments to the Research Analyst regulations and the follow-on circulars introduced:
- A fee cap for individual and HUF clients who are not accredited investors: a maximum of ₹1,51,000 per annum per family, subject to revision every three years based on the Cost Inflation Index, excluding statutory charges. Alternatively, fees may be charged as a percentage of assets under advice within prescribed limits.
- No advance fees beyond one year, with excess advance fees collected before January 2025 required to be refunded by 30 June 2025.
- No breakage fee on early termination for these clients.
- Most Important Terms and Conditions (MITC) — a standardised disclosure that must be included in the terms of service, with client consent obtained and verifiable records maintained.
- KYC obligations for all fee-paying clients, with records retained.
- Disclosure of AI tool usage in producing research.
- Client-level segregation between research and distribution activities.
- Deposit requirements based on client count, ranging from ₹1 lakh to ₹10 lakh, and registration through the Research Analyst Administration and Supervisory Body (RAASB) at BSE.
The practical upshot: a legitimate basket provider is a registered Research Analyst with a public registration number, a disclosed methodology, a stated benchmark, a capped fee and a standardised terms document. If any of those are missing, that is information.
How to Evaluate a Basket
1. Verify registration first
Check the SEBI registration number on the SEBI intermediaries list — not on the provider’s own website. This takes a minute and eliminates a whole class of risk.
SEBI has been active on the enforcement side. The January 2025 circular restricted SEBI-regulated entities from associating with unregistered finfluencers, including through referral or marketing arrangements. A December 2025 order impounded ₹546 crore in a matter where SEBI concluded that trading academy operations were providing unregistered investment advisory and research services under the cover of education.
2. Read the methodology, not the theme
“Electric mobility” or “digital India” is a narrative. The methodology is the question: what are the selection criteria, the weighting logic, the entry and exit rules, and the rebalancing trigger? A basket with a compelling story and a vague method is a story you are paying for.
3. Check the benchmark honestly
SEBI requires benchmarking. Check whether the comparison is fair. A mid-cap-heavy thematic basket benchmarked against the Nifty 50 will look impressive in a mid-cap rally for reasons unrelated to skill. Compare against an index that reflects the actual market-cap and sector profile of the holdings.
4. Understand the costs — all four layers
This is where baskets are most often misjudged.
| Cost layer | Who charges it |
|---|---|
| Subscription fee | The research provider |
| Brokerage on every rebalance | Your broker |
| STT, exchange charges, stamp duty, GST | Statutory, per transaction |
| Capital gains tax on every rebalance sale | You |
A basket that rebalances quarterly generates four rounds of transaction costs annually and — because you hold the shares directly — realises capital gains each time. Short-term equity gains are taxed at 20%; long-term gains above ₹1.25 lakh a year at 12.5%.
That last point is the structural difference from a mutual fund. Inside a mutual fund, the manager’s churn is not a taxable event for you. In a basket, it is. A high-turnover basket can be materially more expensive after tax than its headline subscription fee suggests, even when gross returns look similar.
5. Check the rebalancing discipline
How often, and what triggers it? Frequent discretionary rebalancing is expensive and often reactive. Ask whether historical rebalances followed the stated methodology or looked like performance chasing.
6. Look at the underlying liquidity
Baskets weighted toward small and micro caps carry the segment’s liquidity risk. Check whether any constituent appears on the NSE or BSE ASM, GSM or ESM surveillance lists — those securities face price bands, trade-to-trade settlement or 100% margin requirements, and brokers may block trading in them entirely.
Where Baskets Fit — and Where They Do Not
Reasonable use: a satellite allocation of 15–25% of your equity portfolio, for thematic or factor exposure you cannot easily get through a fund, with the core in low-cost diversified funds.
Poor use: as the entire portfolio; as a substitute for understanding what you own; or stacking five baskets that turn out to hold the same twenty large caps.
The overlap test: list the holdings of every basket and fund you own. If the same names appear repeatedly across them, you are paying multiple fees for one exposure.
Baskets Versus the Alternatives
| Basket / model portfolio | Mutual fund | PMS | |
|---|---|---|---|
| Minimum | Typically low | ₹500 | ₹50 lakh |
| You own | Shares directly | Fund units | Shares directly |
| Tax on manager’s churn | Yours, per rebalance | Not applicable | Yours, per trade |
| Transparency | Full holdings | Monthly disclosure | Full holdings |
| Regulated as | Research service (RA) | Mutual fund scheme | Portfolio management |
| Discretion | You approve rebalances | Manager acts | Manager acts |
Frequently Asked Questions
Are curated stock baskets regulated in India?
Yes. Where a basket assigns weightages and is accompanied by a research report, it is a model portfolio under the SEBI (Research Analysts) Regulations and must comply with SEBI’s model portfolio framework.
What is the maximum a research analyst can charge me?
For individual and HUF clients who are not accredited investors, ₹1,51,000 per annum per family, subject to periodic revision based on the Cost Inflation Index and excluding statutory charges. A percentage-of-assets-under-advice option also exists within prescribed limits.
Is a basket more tax-efficient than a mutual fund?
Generally less so, because you hold the securities directly and each rebalance realises a capital gain in your hands. A fund’s internal churn is not taxed to the unitholder.
How do I verify a provider’s registration?
Search the SEBI intermediaries list on sebi.gov.in using the name or registration number. Registered Research Analysts and Investment Advisers have public registration numbers.
Sources and Further Reading
- SEBI Master Circular for Research Analysts, 27 June 2025 — sebi.gov.in
- SEBI Guidelines for Research Analysts, January 2025, including the model portfolio framework in Annexure-A
- SEBI (Research Analysts) (Third Amendment) Regulations, 2024, effective 16 December 2024
- SEBI circular dated 29 January 2025 on association with unregistered entities
- NSE and BSE ASM, GSM and ESM surveillance lists