HDFC Mutual Fund has announced the launch of HDFC Defence Fund – a first of its kind mutual fund that aims to invest in defence and allied sector companies. The new fund offer (NFO) opens for subscription on May 19, 2023 and will close on June 2, 2023.
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 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.
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.
HDFC Mutual Fund said in a statement: “Defence as a sector, sees a constant need to modernise its platforms due its strategic relevance for the country and technological advancements. Through initiatives like Make in India, the government policies remain conducive to the growth of defence sector in the country. HDFC Defence Fund will seek to invest in companies with good quality management with demonstrated track record and aim to achieve diversification by following a multi-cap strategy. The Fund’s focus would be on growth and quality at reasonable valuations by investing across large, mid and small cap stocks.”
HDFC Mutual Fund said that the product is suitable for investors willing to generate long-term capital appreciation and/or income and invest predominantly in equity and equity related instruments of defence and allied sector companies.
Navneet Munot, managing director and chief executive Officer, HDFC Asset Management Company (AMC) said in a statement: “HDFC Defence Fund is the first of its kind fund investing in companies in the defence and allied industries. We are presenting investors an opportunity to participate in structural growth potential of India’s defence sector.”
Abhishek Poddar, fund manager, equity, and senior equity analyst, dealing and investments, HDFC AMC said in a statement: “Defence expenditure is set to increase globally as countries enhance their defence capabilities. Self-reliance in defence led by strong R&D focus and enhancement of manufacturing capabilities creates opportunity for Indian companies to serve domestic market as well as tap large export potential. This could offer a multi-decadal investment opportunity.”
