HDFC Mutual Fund closes doors to new investors in defence fund

Published on Jul 10, 2024 08:50

HDFC Mutual Fund announced a restriction on new investments in its Defence Fund, effective 22 July 2024. The fund will no longer accept fresh registrations for Systematic Investment Plans (SIPs). Existing SIPs and transactions will continue as usual, but lumpsum investments and Systematic Transfer Plans (STPs) remain restricted.

This decision is a strategic move to safeguard the fund`s health. The Defence Fund is a concentrated portfolio, holding only 21 stocks with the top 5 comprising about 63% of the assets. Limiting new inflows allows the fund to maintain a focus on growth, quality, and reasonable valuations within the limited investment universe of the defence sector.

The HDFC Defence Fund, launched in June 2023, invests at least 80% in companies belonging to the defence and allied sectors, including aerospace, explosives, and shipbuilding. It follows a multi-cap strategy, incorporating large, mid, and small-cap companies, and is benchmarked against the Nifty India Defence Index TRI.

While existing investors can continue their investments, new investors seeking exposure to the defence sector will need to consider alternative options until HDFC Mutual Fund revises its policy.