HDFC Defence Fund: Investment in this new open-ended equity fund scheme opens from 19 May to 2 June

HDFC Mutual Fund has announced the launch of the HDFC Defence Fund which plans to invest in defence & allied sector companies. Subscriptions in this new fund offer will open on May 19 and will close on June 2, 2023. The new scheme follows a bottom-up approach of portfolio construction within the defence ecosystem.

On the launch, Navneet Munot, Managing Director and Chief Executive Officer, of HDFC Asset Management Company Limited said, “Defence readiness is critical to peace, prosperity and social well-being. The Government has also been pushing for Aatmanirbharta in defence sector."

Munot added, "With HDFC Defence Fund, 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 “

Meanwhile, Abhishek Poddar- Fund Manager said, "in a multipolar world, defence expenditure globally is set to increase 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.”

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Here are 10 key highlights of the HDFC Defence Fund:

1. The NFO for this scheme will start on May 19 and will be available till June 2nd. The product labelling assigned during the new fund offer period is based on an internal assessment of the scheme's characteristics or model portfolio and the same may vary post-NFO when the actual investments are made.

2. HDFC MF says the defence fund is suitable for investors who are seeking long-term capital appreciation/income.

3. HDFC Defence Fund is an open-ended equity scheme investing in Defence & allied sector companies. The scheme will invest at least 80% of its Net Assets in Defence & allied sector Companies.

4. Defence and allied stocks are those stocks which are orming part of certain eligible ‘basic industries’ based on AMFI Industry classification including Aerospace & Defence, Explosives, Ship Building & Allied Services as amended from time to time.

5. Also, stocks from any other defence & allied sectors as per benchmark’s criteria stocks present on SIDM (Society of Indian Defence Manufacturers) list; and lastly, stocks which obtain at least 10% of revenue from the defence segment --- are also included in the new fund scheme.

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6. The scheme will be managed by Abhishek Poddar- Fund Manager – Equity and Senior Equity Analyst, Dealing & Investments, HDFC Asset Management Company Limited who has over 17 years of experience in equity research, investment banking, and corporate finance.

7. HDFC Defence Fund will seek to invest in companies with good quality management with demonstrated track records and aim to achieve diversification by following a multi-cap strategy.

8. The Fund’s focus would be on growth and quality at reasonable valuations by investing across large, mid, and small cap stocks.

9. HDFC MF advised investors to consult their financial advices, if in doubt about whether the defence fund is suitable for them.

10. HDFC AMC is the investment manager of HDFC Mutual Fund (HDFC MF).