HDFC Mutual Fund, the third largest asset manager in the country, has submitted a defense fund application which will be the first such fund in the mutual fund industry at Rs 37 lakh crore.
The HDFC Defense Fund will be a sectoral fund that will invest in companies involved in the defense sector. HDFC Mutual Fund may launch the Fund with its approval by the Securities and Exchange Board of India (SEBI) market regulator.
It will be compared to the new Nifty India Defense Index. Stocks in the current index include Astra Microwave Products, BEML, Bharat Dynamics, Bharat Electronics, Cochin Shipyard, Garden Reach Shipbuilders & Engineers, Hindustan Aeronautics, MTAR Technologies, Mazagaon Dock Shipbuilders, and Solar Industries.
The index is made up of companies that are part of the defense industry or that derive at least 10% of their revenue from the defense industry.
A retrospective analysis of the index shows that it has returned 25% over the last four years.
Funds in the sector collectively account for Rs 1.43 crore of investors’ assets in the mutual fund industry, according to data from AMFI.