The defence sector is gaining significant attention as India ramps up its focus on modernisation and self-reliance. Initiatives like iDEX and SAMARTHYA are driving technological advancements in AI, cyber warfare, and indigenous weapon systems, boosting innovation across the industry.
With India aiming for ₹3 lakh crore in domestic production and ₹50,000 crore in exports by 2029, defence sector mutual funds provide a way for investors to engage with this evolving industry.
Let’s explore the best defence sector mutual funds in June 2025, ranked by their AUM.
Below is a list of the top defence sector mutual funds in June 2025, ranked based on their AUM.
| Name | Sub Category | ↓AUM | NAV |
| HDFC Defence Fund | Thematic Fund | 5,487.27 | 25.87 |
| Motilal Oswal Nifty India Defence Index Fund | Index Fund | 2,875.46 | 11.62 |
| Aditya Birla SL Nifty India Defence Index Fund | Index Fund | 461.46 | 12.69 |
Note: The defence sector mutual funds listed above are sorted as per the AUM as of June 5, 2025.
HDFC Defence Fund aims to generate long-term capital appreciation by primarily investing in equity and equity-related securities of companies in the defence and allied sectors.
As of April 2025, the fund maintains a strong focus on capital goods, with Bharat Electronics comprising 19.5% of the portfolio and Hindustan Aeronautics accounting for 17.87%. The fund also includes exposure to the chemicals segment through Solar Industries India, which holds a 9.26% weight in the overall asset mix.
Key Metrics:
Motilal Oswal Nifty India Defence Index Fund aims to mirror the total returns of the Nifty India Defence Total Return Index, subject to tracking error. As of April 2025, the fund maintains a high equity allocation of 99.97%, with minimal exposure to debt.
The fund holds 18 stocks, with its top 5 accounting for 70.73% of the portfolio. Key holdings include Hindustan Aeronautics, Bharat Electronics, and Solar Industries India, all of which align with the fund’s focus on the defence sector.
Key metrics:
Exit Load: 1%
Aditya Birla SL Nifty India Defence Index Fund aims to generate returns that closely align with those of the Nifty India Defence Total Return Index, subject to tracking errors.
The fund's portfolio reflects a strong sectoral concentration in capital goods and chemicals, consistent with its thematic focus. Major holdings include Hindustan Aeronautics and Bharat Electronics from the capital goods sector, and Solar Industries India from the chemicals sector.
Key metrics:
The defence sector in India continues to evolve, supported by policy initiatives and increasing government focus on domestic manufacturing and technological innovation. Mutual funds aligned with this theme provide a way to gain exposure to companies involved in defence and allied industries.
While many of these funds are relatively new and lack long-term performance history, metrics such as AUM, expense ratios, and asset allocation offer useful insights for evaluation. Understanding the fund's structure and holdings can help investors make more informed decisions in line with their financial goals and risk appetite.
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 research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jun 5, 2025, 1:55 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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