Synopsis: India’s defence mutual funds have become a popular investment option since investors started to show interest in defence-related assets, and government efforts to build defence manufacturing capabilities increased. The funds invest in companies that operate within India’s defence ecosystem, which includes aerospace and defence engineering, capital goods and related industries. The defence mutual funds display their newest NAVs and return data, and investment strategies through a straightforward presentation of their top funds.
The defence sector in India has gained increased interest from both government officials and investors. The positive outlook for defence stocks has been driven by increased defence spending, growing export activities and the Make in India defence manufacturing program.
Investors can access defence company stocks through mutual funds that follow this investment theme because these funds offer a complete range of defence company shares instead of individual stock options.
Thematic equity funds exist as concentrated investment funds, which carry greater financial risk compared to standard equity funds that spread their investments across different sectors. The market performance of defence and allied stocks determines their business results. The following are five defence-specific mutual funds available to Indian investors
Top Defence Mutual Funds in India:
1. HDFC Defence Fund
- NAV at ₹25.111, while the fund achieved a one-year return of about 46.81% and a 2-year return of ₹22.43. The fund maintains an expense ratio of 0.82% while managing assets worth ₹7,793.88 crore and implementing a 1% exit load fee.
- The fund maintains an investment strategy that encompasses the complete range of companies operating in India’s defence sector, starting from large-cap businesses to mid-cap and small-cap firms. The company directs its resources towards defence manufacturing and aerospace and defence systems and capital goods sectors, which position the portfolio for profit from increasing defence budgets and contract expansion.
2. Motilal Oswal Nifty India Defence Index Fund
- NAV of ₹10.60 and generated a remarkable one-year return of about 51.76% more than its initial value. The fund uses a passive investment method that tracks the Nifty India Defence Index. The fund operates with an expense ratio of 0.54% and manages assets worth ₹4,062.11 crore while charging a 1% exit fee.
- The fund purchases defence-related stocks that belong to both large and mid-sized companies. Solar Industries and Mazagon Dock Shipbuilders, which create comprehensive market access to companies that will experience growth from rising defence spending.
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3. Aditya Birla Sun Life Nifty India Defence Index Fund
- NAV of ₹11.57 and delivered a 1-year return of about 51.34%. The Nifty India Defence Index serves as the benchmark for this passive index fund.
- The fund operates with assets under management of ₹855.80 crore and maintains an expense ratio of 0.33% and an exit load of 0.05%. The fund invests across aerospace, defence manufacturing, and capital goods segments. The main assets of the company include shares from Bharat Electronics Ltd., Hindustan Aeronautics Limited, and Bharat Forge Ltd.
4. Groww Nifty India Defence ETF Fund of Fund (FoF)
- NAV of ₹11.95, which resulted in a 1-year return of about 50.79%. The fund operates as a fund of funds (FOF), which invests in the Groww Nifty India Defence ETF.
- The scheme has an expense ratio of 0.21% and, an AUM of ₹93.41 crore and an exit load of 1%. The fund obtains its investment through the Nifty India Defence Index, which enables it to invest in Bharat Electronics Ltd., Hindustan Aeronautics Limited, Bharat Forge Ltd. and other defence companies.
Note: The NAV, AUM, expense ratio, and other details mentioned for the funds are sourced from COIN by Zerodha as of 5th March 2026.
Comparison of Top Defence Mutual Funds (2026)
Who Should Consider Defence Mutual Funds
These funds suit investors seeking exposure to India’s defence sector and willing to take moderate-to-high risks. They work best as a satellite investment alongside a diversified portfolio.
Conclusion
Defence mutual funds have delivered strong 1-year returns due to higher government spending and growth in India’s defence sector. These funds function as satellite investments, which investors should use together with their main investment portfolio. Long-term success depends on three factors, which include policy stability, efficient execution and sector sustainability.
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as financial advice or investment recommendation. Returns mentioned are based on historical performance and may not be sustained in the future. Mutual fund investments are subject to market risks, including potential loss of capital. Investors are advised to assess their risk appetite and financial goals and to consult a certified financial advisor before investing.
Written by – Ameet S
