Best Defence Mutual Funds for May 2026 Based on 1‑Year Returns: HDFC Defence Fund, Motilal Oswal Nifty India Defence Index Fund and More

Defence mutual funds are thematic equity schemes that invest in companies linked to defence production, aerospace, and allied manufacturing sectors. These funds may adopt either active management or passive index‑tracking strategies, depending on their structure.

Their performance is closely tied to government policy, defence spending, and industry‑specific developments. Based on available data for May 2026, the following defence mutual funds are among the key schemes based on 1‑year returns.

Best Defence Mutual Funds Based on 1‑Year Returns

Note: Data as on May 15, 2026

HDFC Defence Fund

HDFC Defence Fund is a sectoral equity scheme that invests in companies associated with defence, aerospace, and related manufacturing activities. The portfolio may include public sector undertakings as well as private sector companies involved in engineering, electronics, shipbuilding, and aerospace systems.

The scheme aims to capture opportunities arising from defence modernisation, indigenisation initiatives, and government spending. Its performance can be influenced by policy decisions, order flows, and geopolitical developments due to its focused exposure.

Motilal Oswal Nifty India Defence Index Fund

Motilal Oswal Nifty India Defence Index Fund is a passive fund that seeks to replicate the performance of the Nifty India Defence Index. The scheme invests in companies engaged in defence production, aerospace technology, and military equipment as included in the index.

It follows an index‑based approach without active stock selection. Fund performance is directly linked to index movements and sector‑specific developments.

Aditya Birla Sun Life Nifty India Defence Index Fund

Aditya Birla Sun Life Nifty India Defence Index Fund is an index‑tracking scheme that invests in constituent companies of the Nifty India Defence Index. The fund provides exposure to sectors such as defence manufacturing, engineering, aerospace, and electronics.

It follows a passive investment strategy aimed at replicating index returns, subject to tracking error. Returns are dependent on the performance of the underlying index and sector activity.

Axis Nifty India Defence Index Fund

Axis Nifty India Defence Index Fund invests in stocks that form part of the Nifty India Defence Index. The scheme provides exposure to companies involved in defence equipment manufacturing, aerospace systems, and related industrial activities.

It follows a passive strategy aligned with index composition. Fund returns are influenced by developments in the defence sector, including policy measures and spending patterns.

Read More: Best Balanced Advantage Mutual Funds for May 2026 Based on 5-Year CAGR.

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Conclusion

Defence mutual funds listed above are concentrated thematic schemes that provide exposure to India’s defence and aerospace sectors. Their performance is linked to sector‑specific factors such as government expenditure, indigenisation policies, and industrial growth trends.

Passive index funds track benchmark performance, while actively managed funds may take allocation decisions within the sector. As of May 2026, these funds highlight the available options for participating in the defence theme through mutual fund structures.

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.