Best Defence Sector Mutual Funds In July 2025: HDFC Defence Fund and More Based on AUM

The defence sector in India is drawing a lot of interest as the country pushes for modernisation and becoming self-reliant. Government programs like iDEX and SAMARTHYA are helping develop new technologies in areas such as artificial intelligence, cybersecurity, and locally made weapons, which is driving innovation across the sector.

India has set big goals—to achieve ₹3 lakh crore in domestic defence production and ₹50,000 crore in exports by 2029. For investors, defence sector mutual funds offer an opportunity to be part of this growing industry.

In this article, we will look at the top Defence Sector Mutual Funds in July 2025, ranked by their Assets Under Management (AUM).

Best Defence Sector Mutual Funds in July 2025 

Note: The Defence Sector Mutual Funds listed above are sorted as per the AUM as of July 01, 2025.

Overview of Defence Sector Mutual Funds in July 2025

1. HDFC Defence Fund

The HDFC Defence Fund aims to grow wealth over the long term by mainly investing in shares and related securities of defence and allied companies.

As of April 2025, the fund has a large portion of its assets in capital goods companies. Bharat Electronics makes up 19.5% of the portfolio, while Hindustan Aeronautics holds a share of 17.87%. The fund also invests in the chemicals sector, with Solar Industries India accounting for 9.26% of the total investments.

Key Metrics

• NAV: ₹26.29
• 1-Month Returns: 3.52%
• 1-Year Returns: 10.93%
• CAGR: 59.18%

2. Motilal Oswal Nifty India Defence Index Fund

This fund’s goal is to match the total returns of the Nifty India Defence Total Return Index as closely as possible, considering tracking errors.

By April 2025, it had 99.97% of its assets invested in equities, with almost no allocation to debt instruments.

The portfolio contains 18 stocks, with the top 5 holdings making up 70.73% of the total. Key stocks include Hindustan Aeronautics, Bharat Electronics, and Solar Industries India, all of which align with the fund’s defence theme.

Key Metrics

• NAV: ₹11.62
• 1-Month Returns: 2.09%
• 1-Year Returns: 0.00%

3. Aditya Birla SL Nifty India Defence Index Fund

The Aditya Birla SL Nifty India Defence Index Fund is designed to deliver returns that closely match the Nifty India Defence Total Return Index, with some tracking errors possible.

Its portfolio shows a clear focus on capital goods and chemicals sectors. Major investments include Hindustan Aeronautics and Bharat Electronics in capital goods, along with Solar Industries India representing chemicals.

Key Metrics

• NAV: ₹12.69
• 1-Month Returns: 2.07%
• 1-Year Returns: 0.00%

Read More: Best EV Stocks in July 2025 Based on Market Cap, 5Y CAGR: Tata Motors, Samvardhana and More.

Conclusion

India’s defence sector is steadily growing, driven by supportive government policies and a strong push for local manufacturing and new technologies. Mutual funds that focus on this sector give investors a chance to invest in companies working in defence and related fields.

Although most of these funds are quite new and don’t yet have a long track record, details like their AUM, expense ratios, and how their assets are distributed can help you assess them better. By understanding how each fund is structured and what companies it holds, investors can choose options that fit their financial goals and match their comfort with risk.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.