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Economic Times
28-05-2025
- Business
- Economic Times
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. 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. 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, 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 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 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 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 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 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 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 should always choose a scheme based on risk appetite, investment horizon, and goals. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) 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@ alongwith your age, risk profile, and Twitter handle.
Time of India
28-05-2025
- Business
- Time of India
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, 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@ alongwith your age, risk profile, and Twitter handle.
Time of India
17-05-2025
- Business
- Time of India
Defence ETFs gain 17% in one week. Should you add to your portfolio?
Defence ETFs have gained upto 17% in the last one week after the success of Operation Sindoor and Prime Minister Narendra Modi's strong endorsement of India's defence manufacturing capabilities. Two ETFs - Groww Nifty India Defence ETF and Motilal Oswal Nifty India Defence ETF - gained 17.16% and 17.17% respectively in the said period. A fund of fund based on defence ETF - Groww Nifty India Defence ETF FOF offered 17.69% in the similar time period. These schemes are benchmarked against Nifty India Defence - TRI, which went up by 17.22% in the similar time period. Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » Also Read | Flexi Cap vs. Multi Asset Allocation Mutual Funds: Which one is best for you? An expert attributes this surge to being driven by rising geopolitical escalations between India and Pakistan. 'The rising tensions between India and Pakistan have increased investor interest in defence stocks, and with increased government spending, policy support, and geopolitical factors, it is gaining attention from investors. Ongoing geopolitical tensions continue to make defence a key policy-supported and structurally important sector,' said Shweta Rajani, Head - Mutual Funds at Anand Rathi Wealth Limited . Live Events The focus on defence stocks came after reports that the Modi government has called a meeting with defence makers. To this Shweta adds, if we look at India's defence budget, it has nearly tripled over the past decade from Rs 2.29 lakh crore in 2014–15 to Rs 6.81 lakh crore in 2025–26, and now accounts for 13.45% of the total national budget. 'Additionally, the government is expected to push for greater indigenous manufacturing of defence equipment for the Indian army, which is likely to benefit domestic defence manufacturers,' she added. In the last two weeks, these defence sector based ETFs have gained 18% whereas the fund of fund has gone up 19.02% in the last two weeks. The index funds based on the defence sector delivered 18% return in the same period. According to a report by ETMarkets, the rally in the defence stocks comes in the wake of Operation Sindoor — India's military response to the April 22 Pahalgam terror attack — which showcased the country's defence strength using indigenous systems. Also Read | Coal India and ITC Hotels among stocks Parag Parikh Flexi Cap Fund bought and sold in April The report adds that in his first national address after the operation, PM Modi called for greater military self-reliance, emphasising India's growing role in new-age warfare. 'We have proven our dominance in modern warfare,' Modi said. 'We have always defeated Pakistan on the battlefield. Today, we've demonstrated our superiority again. The time has come for 'Made in India' defence equipment. We've adopted a zero-tolerance policy towards terrorism.' Commenting on the way forward for the defence sector, the experts said that, looking ahead, we remain optimistic about the defence sector, which is expected to perform well, supported by favourable government policies and long-term capital commitments. 'However, it is not advisable to invest solely in any single sector, as sectoral and thematic funds tend to be cyclical in nature. For instance, while defence was among the top-performing sectors from 2023 to mid-2024, it turned into one of the underperformers in the latter half of 2024,' she added. 'We recommend that investors consider actively managed diversified equity funds, such as market-cap-based funds and strategy-based funds, such as value, contra, and focused, as these funds provide broad exposure across sectors and categories, helping reduce concentration risk and offering resilience across market cycles,' Shweta recommended.
Time of India
12-05-2025
- Business
- Time of India
Defence sector ETFs surge amid India-Pakistan tensions, Groww, Motilal Oswal ETFs lead with 7% gains
Representative image Defence sector-based Exchange-Traded Funds (ETFs) have seen impressive growth, with returns up to 7% in the past two weeks, fueled by heightened India-Pakistan tensions. This surge comes amid increased investor interest in defence stocks, which are typically considered resilient during periods of geopolitical instability. Groww Nifty India Defence ETF and Motilal Oswal Nifty India Defence ETF both delivered solid returns of 6.73% and 6.74%, respectively, during the period. Meanwhile, Groww Nifty India Defence ETF Fund of Funds (FoF) outpaced them with a gain of 7.10% in the same timeframe, according to an ET report. These ETFs are benchmarked against the Nifty India Defence TRI, which recorded a 6.75% increase over the same period. The uptick in returns follows reports that the Indian government is meeting with defence manufacturers next week, sparking optimism around military procurement and defence sector growth. In the past week alone, the defence ETFs posted more modest gains of up to 1%, though their performance over the last three months has been more substantial, with returns reaching up to 19.56%. Among the ETFs, the Motilal Oswal Nifty India Defence ETF led with 19.56%, followed closely by the Groww Nifty India Defence ETF at 19.24%. The Groww Nifty India Defence ETF FoF also delivered 19.24% over the same period. In the past month, defence ETFs have surged by up to 16%, with Groww Nifty India Defence ETF FoF leading the pack with 16.40% returns. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
