Synopsis– India’s defence market is expanding at a fast pace owing to increasing government expenditure and emphasis on self-reliance in military equipment. Mutual funds and ETFs that are defence-oriented enable one to capture long-term growth by investing in companies such as Bharat Electronics, HAL and Solar Industries. In this article, we talk about the top two Mutual Funds and two ETFs that are available for investors in the Defense Sector.
India’s defence sector is gaining momentum amid rising government spending, exports, and geopolitical focus. Let us explore the top mutual funds and ETFs offering exposure to this growing strategic sector.
1. Motilal Oswal Nifty India Defence Index Fund Direct Growth
- CAGR Since Inception: –4.49%
- 1-Year Return: 5.45%
- AUM: ₹4,007 Crores (as of Aug 2025)
- Expense Ratio: 0.42%
- Minimum Lump Sum: ₹500
- Minimum SIP: ₹500
2. Aditya Birla Sun Life Nifty India Defence Index Fund Direct Growth
- CAGR Since Inception: 12.41%
- AUM: ₹731 Crores (as of Aug 2025)
- Expense Ratio: 0.31%
- Minimum Lump Sum: ₹500
- Minimum SIP: ₹500
Both the funds have holdings of 18 Companies with similar holdings percentage. Suited to investors who want long-term exposure to India through a passive index-based investment to the growing defence and aerospace theme. Aditya Birla has a lesser Expense Ratio which can be a USP.
Table Showing Defense Sector focused Mutual Funds
| Scheme Name | Launch Date | CAGR Since Inception | 1-Year Return | AUM (₹ Cr) | Min SIP (₹) | Min Lumpsum (₹) | Expense Ratio |
| Motilal Oswal Nifty India Defence Index Fund (Direct Growth) | 3-7-24 | -4.49% | 5.45% | 4,007 | 500 | 500 | 0.42% |
| Aditya Birla Sun Life Nifty India Defence Index Fund (Direct Growth) | 30-8-24 | 12.41% | — | 731 | 500 | 500 | 0.31% |
| Benchmark – Nifty India Defence TRI | — | 33.62% | 1.79% | — | — | — | — |
Nifty India Defence TRI gave 3 yr CAGR returns of 66.56% and 5 yr CAGR returns of 60.78%.
Table showing Sector allocation and top holdings of Mutual funds
| Feature | Motilal Oswal Nifty India Defence Index Fund (Direct Growth) | Aditya Birla Sun Life Nifty India Defence Index Fund (Direct Growth) |
| Sector Allocation | Capital Goods – 84.19% Chemicals – 15.87% | Capital Goods – 84.35% Chemicals – 15.89% |
| Top Holdings | Bharat Electronics – 20.33% Hindustan Aeronautics – 19.90% Solar Industries India – 15.87% | Bharat Electronics – 20.36% Hindustan Aeronautics – 19.93% Solar Industries India – 15.89% |
As of July 2025*
3. Motilal Oswal Nifty India Defence ETF (MODEFENCE)
- Market Price (as of 05-08-2025): ₹85.46
- AUM: ₹587 Crores
- Expense Ratio: 0.41%
- 52-Week Low/High: ₹55.21 / ₹102
4. Groww Nifty India Defence ETF
- Market Price (as of 05-08-2025): ₹78.00
- AUM: ₹106.95 Crores
- Expense Ratio: 0.43%
- 52-Week Low/High: ₹49.83 / ₹93.89
ETF choice for tactical traders that need live trading and liquidity with Nifty India Defence Index tracking. Though the trading is thin in Groww Nifty Defence ETF.
Table Showing Defense ETF’s
| ETF Name | Market Price (as on 05-08-2025) | AUM (₹ Cr) | Expense Ratio | 52-W Low | 52-W High |
| Motilal Oswal Nifty India Defence ETF (MODEFENCE) | ₹85.46 | 587 | 0.41% | ₹55.21 | ₹102 |
| Groww Nifty India Defence ETF | ₹78.00 | 106.95 | 0.43% | ₹49.83 | ₹93.89 |
Final Thoughts
Investment at the defence sector is a potent strategic thematic bet on India as it aims to achieve self-reliance in defence manufacturing. They provide focussed exposure to PSU and private players.They are however theme-based, hence subject to increased short term volatility and sector specific concentration risks. Investors are advised to make an exposure only as 5-10% of portfolio and with long-term perspective with the knowledge that the performance may be cyclical, depending on the order flows and on government budgets.
Written by Prajwal Hegde
