Defence sector based mutual funds rally up to 60% in 3 months. Will the momentum continue?
Defence
sector based
mutual funds
have rallied upto 60% in the last three months. There are around six funds in the category including active and passive and gave an average return of 57.70% in the same period.
Three schemes in the category gave over 60% return.
Motilal Oswal Nifty India Defence ETF
offered the highest return of around 60.49% in the last three months, followed by Motilal Oswal Nifty India Defence Index Fund which gave 60.23% return in the same period.
Best MF to invest
Looking for the best mutual funds to invest? Here are our recommendations.
View
Details
»
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Hoa Binh: Unsold Furniture Liquidation 2024 (Prices May Surprise You)
Unsold Furniture | Search Ads
Learn More
Undo
Also Read |
Defence ETFs gain 17% in one week. Should you add to your portfolio?
Groww Nifty India Defence ETF
and Aditya Birla SL Nifty India Defence Index Fund gave 60.12% and 59.96% returns respectively in the similar time period. Groww Nifty India Defence ETF FOF gave 59.45% return in the mentioned time period.
Live Events
HDFC Defence Fund
, the only active fund based on the defence sector, delivered 45.93% return in the mentioned period.
Experts attribute this surge to a combination of strong earnings delivery by the sector constituents, policy momentum with increased capital allocation by the Indian government and trigger coming from actual use case of India's Defence Capability in recent India-Pakistan faceoff at borders.
'Key holdings in defence index funds reported strong earnings growth. The Indian defence budget allocation for FY25 has maintained a sharp focus on indigenization. Capital outlay of Rs 1.72 lakh crore continues to support new orders. Defence exports reached an all-time high of Rs 21,083 crore in FY24 (up 12% YoY), reflecting rising global demand for Indian defense manufacturing. This surge in earnings, coupled with a policy push and a favorable geopolitical backdrop, led to substantial price rerating and fund outperformance,' said Atul Shinghal, Founder and CEO, Scripbox.
In addition to these factors, another expert adds that
Defence funds
have benefited from the recent surge in prices of defence stocks. Defence stocks have been on the rise in recent months after they were hit badly during the sell-off earlier this year.
'Many countries around the world, including India are ramping up their military capabilities, leading to increased defence spending. In India, this trend was further strengthened post the Operation Sindoor, as the Indian government plans to further improve our defence capabilities,' said Nilesh D Naik, Head of Business – Investments, Share.Market.
In the last six months, defence based passive funds returned 34% with Motilal Oswal Nifty India Defence ETF being the topper as the fund delivered 34.22% return in the last six months, followed by Motilal Oswal Nifty India Defence Index Fund which gained 33.73% in the same period.
Groww Nifty India Defence ETF FOF gave 33.35% in the last six months. HDFC Defence Fund, the only active fund based on this sector, gave 15.86% return in the same period.
Also Read |
HDFC Defence Fund increases stake in HAL, Solar Industries, and 4 other stocks in April
Despite seeing the historical stellar performance by these funds, experts don't recommend investing in these sectoral funds. Shinghal of Scripbox mentions that despite strong sector fundamentals, current valuations are stretched as the trailing P/E ratio of the Motilal Oswal Nifty India Defense Index stands at a steep 61.35x, while the P/B ratio is 13.22x—significantly higher than broader market averages. which in turn indicates that the future growth might be already priced in.
He further adds that the Sharpe Ratio is negative (-0.07), indicating poor risk-adjusted return over recent volatility, despite high absolute returns and the index has 77.5% exposure to mid and small caps, which increases vulnerability to sharp corrections during risk-off sentiment phases.
Those willing to allocate or have existing investments in these funds can follow the strategy Shinghal shared. He mentioned that existing investors should hold and consider profit booking in a staggered manner, new investors should avoid fresh lump-sum allocations and tactical SIPs may be considered only on 10–15% corrections, and lastly the total allocation to defence sector should be between 2-4% and should not exceed 4% of total equity exposure.
On the other hand, Naik advices that thematic funds such as this are typically meant for seasoned investors who have their core portfolio in place and who want to take a tactical bet based on their views on a specific sector or theme. 'With recent rally in defence stocks, many of them have now recovered significantly and are trading at close to their all time highs. While the long term defence sector story seems strong, investors should be extremely cautious while investing in such funds post this rally, given the current valuations,' he added.
ETMutualFunds earlier analysed that in a week's time, defence sector based ETFs have gained upto 17% in one week's time. The focus on defence stocks came after reports that the Modi government has called a meeting with defence makers post the recent India-Pakistan faceoff at borders.
Post the stellar performance of defence funds, Shinghal comments on the outlook for the sector and mentions that while India's long-term defense growth story is intact, current valuations do not offer a favorable risk-reward for fresh allocations and investors are advised to retain moderate exposure (up to 4%), book profits where returns have exceeded expectations, and re-enter during valuation corrections or policy-driven consolidations.
One should always choose a scheme based on risk appetite, investment horizon, and goals.
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on
ETMFqueries@timesinternet.in
alongwith your age, risk profile, and Twitter handle.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
30 minutes ago
- Hans India
Jaishankar reaffirms India's zero-tolerance policy on terrorism
New Delhi: India expects partners to understand its policy of "zero tolerance" against terrorism, and it will never countenance "perpetrators of evil" being put on par with its victims, External Affairs Minister S Jaishankar said on Saturday during extensive talks with his British counterpart David Lammy. Jaishankar's remarks, which seemed to be an attempt to send an unambiguous message to the global community, came against the backdrop of unease in New Delhi over several countries hyphenating India and Pakistan following their four-day clashes last month. Lammy arrived in New Delhi on Saturday morning on a two-day visit to review various aspects of the strategic partnership between the two countries. A British readout said bolstering economic and migration ties and delivering further growth opportunities for British businesses are set to be at the top of the UK foreign secretary's visit to India. Before holding talks with Jaishankar, the British foreign secretary met Prime Minister Narendra Modi. In his televised opening remarks at the meeting with Lammy, Jaishankar thanked the UK for its strong condemnation of the "barbaric" Pahalgam terror attack and London's solidarity and support to New Delhi's fight against terrorism. "We practice a policy of zero tolerance against terrorism and expect our partners to understand it, and we will never countenance perpetrators of evil being put at par with its victims," he said. It is understood that the Indian side explained its challenge of dealing with cross-border terrorism emanating from Pakistan. The UK was among the countries which were in touch with both India and Pakistan in an attempt to de-escalate tensions during their military conflict from May 7-10. Lammy paid a two-day visit to Islamabad from May 16, during which he welcomed the May 10 understanding between India and Pakistan to stop the military actions. Jaishankar also described the recently finalised India-UK free trade deal and the double contribution convention as "truly a milestone". "The recent conclusion of the India-UK FTA and the double contribution convention is truly a milestone which will not only propel our two-way trade and investment but will also have a positive effect on other strategic aspects of our bilateral ties," Jaishankar said.
Time of India
33 minutes ago
- Time of India
Weekly Horoscope (June 09 – June 10): Predictions for Rooster Chinese Zodiac
This week, dear Rooster, your careful planning may meet a sudden change. Do not feel upset if things do not go exactly as you thought. Life is asking you to be flexible for now. A small shift in the path can protect your bigger dream. Stay calm, adjust where needed, and trust the journey. Your dedication will still take you forward, but soft steps may work better than strict ones this time. Weekly Career Horoscope for Rooster Chinese Zodiac In your work life, you might face a situation where a fixed plan needs a little change. Don't see this as a failure. A flexible response can help you manage better and earn respect. You are a natural organiser, but this week demands smart adjustments. A new task or sudden team change may come. Instead of resisting, observe and adapt. Your balance of discipline and flexibility will bring good results. Weekly Love Horoscope for Rooster Chinese Zodiac In love, plans made earlier may not go as expected. A meeting may get delayed, or a partner's mood may change. Don't take it personally. Use this time to listen more and understand the deeper feelings. If single, keep your heart open to new types of people. Being too strict with your expectations can close good doors. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Neem voor het slapengaan 1 kopje en val snel af Beauty Ideas Meer lezen Undo Let love flow naturally and enjoy the small, unplanned moments of closeness. Weekly Money Horoscope for Rooster Chinese Zodiac This week, financial plans may need a temporary pause or small adjustments. A minor expense might arise unexpectedly. Do not get worried. Review your spending and save where you can. Avoid large investments right now unless you are fully sure. A flexible money habit, like shifting budget from one area to another, will help you stay peaceful. Your long-term security will remain safe if you stay practical and calm. Weekly Education Horoscope for Rooster Chinese Zodiac Students with the Rooster sign should prepare for last-minute changes—maybe in schedule, topics, or assignments. Stick to your main study goals, but be flexible in how you reach them. A different learning method or a new subject can surprise you with results. Don't waste time resisting change. Accept it and move ahead. Make short, realistic targets and follow them with focus. Smart adjustments now will support your long-term academic success. Weekly Health Horoscope for Rooster Chinese Zodiac Health-wise, tension in the neck, shoulders, or head may trouble you due to mental pressure. If you feel tired or too serious, step back and take a break. Flexibility is needed not just in body but in your schedule, too. Eat on time, avoid too much caffeine, and sleep properly. A short walk or light stretching will help release stress. Your body needs rhythm, not force. Balance is your best medicine this week. Discover everything about astrology at the Times of India , including daily horoscopes for Aries , Taurus , Gemini , Cancer , Leo , Virgo , Libra , Scorpio , Sagittarius , Capricorn , Aquarius , and Pisces .
Time of India
34 minutes ago
- Time of India
‘No hierarchy, you don't have to wait for your manager to leave to go home': Indian techie reveals why work-life balance is not just a ‘buzzword' in Sweden
An Indian software engineer in Sweden highlighted the stark differences in work culture compared to India through an Instagram video. He emphasized Sweden's flexible schedules, flat hierarchies, and strong focus on work-life balance, where employees are encouraged to prioritize well-being and leave work early. This contrasts with the more intense, formality-driven corporate environment often found in India. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads An Indian software engineer currently living in Sweden offered an insightful look into European work culture , drawing a clear comparison to the often intense corporate atmosphere found in India. Through a simple yet impactful Instagram video that has now surpassed 8.5 million views, Ashutosh Samal laid out the key contrasts between working in Sweden and the environment he was used to back described how most employees in Sweden begin their workday around 8 in the morning, with some companies even providing complimentary breakfast to help their teams start the day smoothly. Offices typically embrace a high degree of flexibility—not just in schedules, but also in the physical work environment. There are no designated desks or private cabins. Whether it's a junior staff member or the CEO, everyone is free to sit wherever they prefer. This practice symbolizes the absence of rigid corporate Swedish offices, the concept of hierarchy is minimal. There is no excessive formality or use of titles, a marked difference from the formality-heavy 'sir' culture common in Indian workplaces. Leadership is more approachable, and collaboration is encouraged across all levels. Ashutosh mentioned that it's not unusual for the CEO to share a desk with other employees, reinforcing the egalitarian nature of the seating and structure, the culture promotes well-being and balance. Employees are not just permitted but actively encouraged to take breaks, grab coffee, or play indoor games during office hours. When the summer season rolls in, many companies reduce the typical eight-hour workday to just seven hours, allowing workers to make the most of the longer daylight late afternoon—usually around 4 or 4:30 pm—most employees are done with their work and head out to spend quality time with their loved ones or simply unwind. Ashutosh emphasized that in Sweden, work-life balance isn't just a trendy phrase; it is woven into the very fabric of their professional video resonated deeply with viewers across the globe. While some Indian users pointed out that perks like free meals, movie tickets, gym memberships, and cab services are also available in several Indian companies, others focused on the deeper cultural shift taking place. A few mentioned that workplaces in cities like Noida are slowly evolving as younger entrepreneurs reshape traditional international viewers, now working outside India, also weighed in. One person who moved to Luxembourg shared that leaving India's high-pressure corporate setup was one of their best life decisions. Another person, who had worked in Helsinki, remarked that the respectful and inclusive work environment in Scandinavia had set a standard they now expect reflection by Ashutosh offered more than just a glimpse—it highlighted a model where respect, flexibility, and well-being are prioritized over pressure and hierarchy.
