Ahmedabad: Mutual funds that focus on the Indian defense sector have seen a sharp increase in the last one month. These funds have given returns ranging from 16% to 23%, which shows the growing confidence of investors and the impact of geopolitical events.
In particular, ‘Operation Sindoor’, launched in response to a terrorist attack in Basaron Valley, Pahalgam, Jammu and Kashmir, has once again brought the defense sector into the headlines. Along with this, the government’s ‘Make in India’ policies and decisions that prefer domestic defense production under the self -sufficient Bharat Abhiyan have further increased the interest of investors in these funds.
In the last six months, the defense mutual funds have seen a lot of instability. These funds were at its peak in December 2024, but declined in early 2025. However, the perception of investors changed in April and in May these funds saw a huge increase of 16% to 23%.
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Top -performing funds include Grove Nifty India Defense ETF Fund of Funds and its original Fund Grove Nifty India Defense ETF, which has given 23.20% and 22.79% returns respectively. At the same time, Motilal Oswal Nifty India Defense ETF and its associated Fund of Funds have given a return of 22.84% and 22.75% respectively. Aditya Birla Sun Life Nifty India Defense Index Fund has given a return of 22.76% in the last one month. HDFC Defense Fund has given a strong return of 16.32%.
Experts stated that defense mutual funds are area-specific funds and may be more unstable than other funds (such as defense sub-block manufacturing funds).
Investors who target capital growth in 5 to 10 years, and those who believe in the growing pace towards self -reliance of India should definitely consider these funds.
Defense mutual funds invest in select shares, so the risk is high. They, sectoral or thematic funds, usually invest in a very limited number of shares. In terms of defense index, this is even more true, where the top 3 stocks are responsible for more than 50% of the index alone, and the top 5 stocks together are responsible for more than 70%.
This means that the return of this fund is based on the prices of a few select shares. Therefore, investing in these funds can be risky, especially if the time is not right.
