Rs 10 Lakh to Rs 29 Lakh in 3 Years: Defence Mutual Fund Rewards Investors With Nearly 3x Returns
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HDFC Defence Fund has significantly outperformed its benchmark since inception, with a Rs 10 lakh investment growing to approximately Rs 29.14 lakh, driven by strong exposure to India's rapidly expanding defence sector.
✨ Key Takeaways
India's Defence sector has emerged as one of the strongest-performing investment themes over the past three years, supported by rising defence spending, higher exports and a strong order pipeline across listed companies. Reflecting this trend, HDFC Defence Fund, launched on June 2, 2023, has delivered exceptional returns to investors since its inception.
Rs 10 Lakh Investment Grows To Over Rs 29 Lakh
According to the latest available data, a lump sum investment of Rs 10 lakh made at the launch of the HDFC Defence Fund would have grown to approximately Rs 29.14 lakh as of June 24, 2026. The fund has generated an annualised return of 42.74 per cent since inception.
During the same period, its benchmark, the Nifty India Defence TRI, delivered 37.32 per cent, while gold returned 21.36 per cent and the Public Provident Fund (PPF) generated 7.10 per cent.
Fund Overview
HDFC Defence Fund is an open-ended thematic equity Mutual Fund managed by HDFC Mutual Fund. The scheme is benchmarked against the Nifty India Defence TRI and primarily invests in companies benefiting from India's defence and Aerospace ecosystem.
As of June 24, 2026, the fund's Net Asset Value (NAV) stood at Rs 29.223, while its Assets Under Management (AUM) stood at Rs 9,718.49 crore as of May 31, 2026.
The fund has a Total Expense Ratio (TER) of 1.75 per cent, with a minimum investment amount of Rs 100 and a minimum additional investment of Rs 100. An exit load of 1 per cent is applicable if units are redeemed within one year from the date of allotment. The scheme falls under the Very High Risk category on the riskometer.
Portfolio Allocation
The portfolio remains concentrated in sectors closely linked to India's defence manufacturing ecosystem. Capital Goods accounts for the largest allocation at 60.34 per cent, followed by Automobile and Auto Components at 21.85 per cent, Chemicals at 15.28 per cent, and Construction at 0.78 per cent.
Among the top holdings, Bharat Electronics Limited (BEL) accounts for 15.48 per cent of the portfolio, followed by Bharat Forge (14.39 per cent), Hindustan Aeronautics Limited (12.06 per cent), Solar Industries India (11.97 per cent), MTAR Technologies (6.08 per cent), Astra Microwave Products (5.93 per cent), BEML Limited (5.06 per cent), Eicher Motors (4.07 per cent), Bharat Dynamics Limited (4.03 per cent) and Premier Explosives (3.31 per cent).
Market Capitalisation Mix
The fund maintains a diversified allocation across market capitalisations. Large-Cap stocks account for 46.69 per cent of the portfolio, while Small-Cap stocks contribute 30.83 per cent and Mid-Cap stocks make up 20.73 per cent. The remaining 1.75 per cent is invested in other categories.
The portfolio turnover ratio stands at 16.68 per cent, indicating a relatively low level of portfolio churn and a long-term investment approach.
What Has Driven The Returns?
The fund's strong performance has been supported by India's continued focus on defence indigenisation, increasing domestic manufacturing, higher private sector participation and a robust order pipeline across leading defence companies.
The sector has also benefited from record defence exports, which crossed Rs 38,424 crore in FY26, along with sustained government policy support, improving earnings visibility and rising capital expenditure on indigenous defence manufacturing.
Conclusion
Since its launch in June 2023, HDFC Defence Fund has delivered impressive returns while outperforming its benchmark as well as traditional asset classes such as gold and PPF. A Rs 10 lakh investment at inception has grown to over Rs 29 lakh in just over three years. However, investors should note that thematic funds carry higher concentration risk, and their performance remains closely linked to sector-specific developments, government policies and defence spending.
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Disclaimer: The article is for informational purposes only and not investment advice.