A first of its kind, Defence Sector Mutual Fund launched

New Delhi: A mutual fund of its own kind that aims to invest in defence and allied sector companies has been launched. The HDFC Mutual Fund announced in a press statement that the open-ended scheme will invest at least 80 per cent of its net assets in defence and allied sector companies.

The New Fund offer (NFO) opened for subscription on May 19, 2023 and will close on June 2, 2023.  

At a time when geopolitical tensions are rising in many parts of the world, the need to invest in defence capabilities is being increasingly felt. No wonder defence-focused businesses are in demand and a fund around it should hog some investor attention.

As per the fund prospectus, the defence and allied sector stocks include: (i) Stocks forming part of certain eligible 'basic industries' based on Association of Mutual Funds of India (Amfi) Industry classification, including aerospace and defence, explosives, shipbuilding and allied services as amended from time to time; or (ii) Stocks from any other defence and allied sectors as per benchmark's criteria; or (iii) Stocks present on the Society of Indian Defence Manufacturers (SIDM) list; and which obtain at least 10% of revenue from the defence segment as mentioned above. 

According to the prospectus, the fund will follow a bottom-up approach of portfolio construction within the defence ecosystem, it added. HDFC Mutual Fund has classified investment in the fund in the very high risk category. 

The scheme will be managed by Abhishek Poddar and the performance of the scheme will be benchmarked against Nifty India Defence Index TRI.

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