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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.
India Today
24-04-2025
- Business
- India Today
Gold vs mutual funds: What should you invest in for better returns?
If you're thinking about where to put your money, whether in gold or mutual funds, then you're not alone. Many people wonder which of these two options can give better returns right now. Both are popular, both have their own strengths, and both work A SAFE HAVEN IN TOUGH TIMESGold is often seen as a safe investment. When markets are shaky or inflation rises, many investors turn to gold. That's because gold tends to hold its value and even grow when other assets to CA Ruchika Bhagat, MD, Neeraj Bhagat & Co., 'Gold, traditionally seen as a safe-haven asset, can be a good hedge against inflation and economic uncertainty. Through digital options like Sovereign Gold Bonds (SGBs) or Gold ETFs, investors can systematically invest in gold with ease.' The yellow metal recently surpassed Rs 1 lakh amid growing tension around the world and trade war between the US and to Nilesh D Naik, Head of Investment Products, (PhonePe Wealth), 'Given the recent developments around trade tariffs, dollar weakening and the geopolitical uncertainty, gold has regained the spotlight.'But here's the catch, gold doesn't pay you any interest or dividends. You earn only when the price goes up, and you sell it at a profit. Also, gold prices can be unpredictable in the short term. They may rise quickly and drop just as long-term returns have historically lagged behind equity mutual funds, and it doesn't generate income, only capital appreciation,' said CA Ruchika FUNDS: A GROWTH-ORIENTED CHOICEOn the other hand, mutual funds, particularly equity funds, are linked to the stock market. When the market does well, your mutual fund investment can grow faster than gold. Over the long term, equity mutual funds have given strong returns, often beating inflation and other traditional Ruchika Bhagat stated, 'Mutual funds, especially equity-oriented ones, offer exposure to a diversified portfolio of stocks, managed by professionals. Over the long term, they tend to outperform gold in wealth creation, thanks to the power of compounding and market growth. SIPs in mutual funds are particularly effective for disciplined investing, rupee cost averaging, and harnessing market volatility.'TAX IMPLICATIONS: GOLD AND MUTUAL FUNDSCA (Dr) Suresh Surana said, 'Prior to 23rd July 2024, if gold capital assets are sold within a holding period of 36 months, the gains are treated as short-term capital gains and taxed at the individual's applicable marginal slab rates. If such asset is held for more than 36 months, the gains qualify as long-term and are taxed at 20% u/s 112 with the benefit of indexation.'advertisementOn the other hand, if you hold listed equity mutual fund units for over 12 months before selling, the profits are treated as long-term capital gains; otherwise, they're considered short-term gains, he added.'The short-term capital gains would be taxed at the rate of 15% (enhanced to 20% w.e.f. 23rd July 2024) u/s 111A of the Income Tax Act ('IT Act'). The long-term capital gains are taxed at 10% (enhanced to 12.5% w.e.f. 23rd July 2024) u/s 112A of the IT Act provided such long-term capital gains exceed the threshold limit of Rs. 1.25 lakh in a financial year (previously Rs. 1 lakh prior to Finance (No. 2) Act 2024),' Surana LOOKING BETTER RIGHT NOW?At the moment, gold is performing well because of global worries and inflation concerns. But experts believe that if the market becomes stable and interest rates fall, mutual funds, especially equity ones, could bounce back strongly.'For most investors, mutual funds should be the core SIP choice, especially for long-term goals like retirement or children's education. Gold can be a complementary asset, perhaps 5–10% of your portfolio, for diversification and downside protection,' said added, 'Ultimately, a balanced approach aligned with your risk profile and time horizon works best. Speak with a financial advisor to tailor your SIP strategy accordingly.'advertisementConversely, if you want safety and already have other high-risk investments, gold might work well as a D Naik, 'While equity mutual funds are known to offer a better long-term return potential over the long run, gold helps in hedging against inflation and can potentially outperform all other asset classes during times of global uncertainty.'He added, 'For gold exposure, gold ETFs or gold mutual funds may be a better choice for investment compared to physical gold due to their cost efficiency, convenience and liquidity. A 10-15% exposure to gold is typically considered to be ideal for most investors. Given the current equity valuations and the run-up in gold prices, it may be advisable to take such exposure systematically via SIPs, to reduce the impact of any short-term volatility.'However, the best choice depends on your goals and how much risk you're comfortable with. Bhagat believes a well-balanced plan based on your risk appetite and time frame works best, and a financial advisor can help you build the right Reel
Mint
23-04-2025
- Business
- Mint
THESE 4 mutual fund categories are the right fit when markets wobble. Check list here
When benchmark indices—the Nifty50 and the Sensex—have started to spike after being on a long downward spiral, retail investors are thinking hard about the fund categories they should invest in. The Nifty 50 index recorded a 1,850-point rally in the last six straight sessions while the BSE Sensex touched an intraday high of 79,824, logging a 6,000-point rise in six successive sessions. Read this Livemint article for further details. So, where should investors invest now, and which categories promise high returns in the near future? These are some of the categories of mutual funds wherein wealth advisors recommend investing: I. Balanced advantage fund: These are the funds wherein investment in equity or debt is managed dynamically (0 to 100 per cent in equity and equity-related instruments and 0 to 100 per cent in debt instruments). 'These schemes have the flexibility to move their portfolio between 0 per cent and 100 per cent equity and debt, allowing them to capitalise on changing market environments,' said Preeti Zende, founder of Apna Dhan Financial Services. 'Risk-averse investors with a long-term investment horizon could consider investing in balanced advantage funds for such core allocation, as these funds look to manage risks by dynamically managing equity allocation based on the market valuations. Moreover, such core portfolio allocation decisions should be agnostic to short-term movements in the market,' said Nilesh D Naik, Head of Investment Products, PhonePe Wealth. II. Multiasset fund: These refer to the funds which make investments in at least three asset classes with a minimum allocation of at least 10 per cent in each asset class. 'These funds aim to provide diversification, reduce risk, and potentially improve returns by a fund manager's tactical asset allocation based on market conditions,' adds Zende. III. Aggressive hybrid fund: These refer to schemes that invest 65 per cent to 80 per cent in equity and equity-related instruments and 20 to 35 per cent in debt instruments. 'Investors who can bear the volatility to some extent but also want some kind of downside protection can invest in aggressive hybrid funds that invest in both stocks (equities) and fixed-income securities (debt) with a higher allocation to equities, typically 65-80 per cent, and a smaller allocation to debt, 20-35 per cent,' says Zende. IV. Other categories: During volatility, wealth advisors recommend that investors explore investing in large and flexi cap mutual funds as well. 'Funds from categories such as flexi cap, large cap, large & mid-cap and value are ideal for inclusion in the core portfolio,' advises Nilesh D Naik of Meanwhile, some believe that it is insignificant which fund you opt for; what is important is the ability to stick to a plan that can help you ride through the storm. Harsh Gahlaut, Co-founder and CEO of FinEdge, for instance, argues that instead of reacting to volatility by chasing the right category, investors should anchor their choices to their long-term goals. 'One-size-fits-all investing doesn't work. What does is personalisation, conviction, and behavioural alignment. The real differentiator isn't the fund you choose during a volatile phase — it's your ability to stick to a plan built around your goals. If market swings are unsettling you, it's likely a signal to revisit your 'why' — not your portfolio,' he explains. Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision. Visit here for all personal finance updates. First Published: 23 Apr 2025, 10:43 AM IST
