India’s defence sector has emerged as one of the strongest-performing themes in 2026, with the Nifty India Defence Index delivering over 7.5% returns on a year-to-date (YTD) basis. The index has significantly outperformed the benchmark NIFTY50, which has declined more than 8% during the same period, highlighting the sector’s relative resilience amid global volatility.
The rally has been driven by robust order inflows, rising exports, and strong financial performance from key defence companies. Over the past year, the index has surged around 36%, supported by major contracts secured by companies like Bharat Electronics Limited and Hindustan Aeronautics Limited.
For those looking to tap into this growth story, defence-focused mutual funds offer a structured way to gain exposure. Here’s a look at some of the best defence sector mutual funds to consider in April 2026.
| Fund Name | AUM (₹ Cr) | 1Y Return | 6M Return | 3M Return |
| Motilal Oswal Nifty India Defence Index Fund | 3,697.63 | 33.94% | 0.89% | 3.77% |
| Aditya Birla SL Nifty India Defence Index Fund | 847.22 | 33.78% | 0.89% | 3.76% |
| HDFC Defence Fund | 7,304.61 | 30.88% | -0.73% | 2.96% |
Note: The above-mentioned schemes have been selected based on 1Y Returns as of April 10, 2026.
| Fund Name | Sharpe Ratio | Expense Ratio | Exit Load |
| HDFC Defence Fund | 0.924 | 0.82% | 1.00% |
| Motilal Oswal Nifty India Defence Index Fund | 0.911 | 0.58% | 1.00% |
| Aditya Birla SL Nifty India Defence Index Fund | 0.911 | 0.33% | 0.05% |
Note: The above-mentioned schemes have been selected based on 1Y Returns as of April 10, 2026.
HDFC Defence Fund is an actively managed thematic fund focused on companies in the defence and allied sectors. It aims for long-term capital appreciation through selective stock picking rather than index tracking. With a low entry barrier, it is accessible to retail investors. However, returns depend on fund manager strategy, and the concentrated exposure makes it a “very high” risk option suited for long-term investors.
This is a passive index fund that tracks the Nifty India Defence Index, aiming to replicate its performance with minimal tracking error. It offers a simple, rule-based approach to investing in defence stocks without active management bias. While it reduces fund manager risk, it still carries high sectoral risk due to its focused exposure.
This passive fund replicates the Nifty India Defence Total Return Index, providing investors with cost-efficient exposure to the defence sector. Its standout feature is the extremely low SIP requirement, making it accessible even for small investors. Despite this, it remains a high-risk option due to its sector concentration.
This fund of funds invests in the Groww Nifty India Defence ETF, offering indirect exposure to defence stocks. It combines the simplicity of mutual funds with ETF-based investing. With a relatively low expense ratio, it is a cost-efficient option, but like all thematic funds, it carries “very high” risk.
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Defence sector mutual funds have gained traction in 2026, supported by strong sectoral tailwinds such as rising government spending, export growth, and robust order books across defence companies. The outperformance of the Nifty India Defence Index compared to broader markets highlights the sector’s resilience in a volatile environment.
A balanced approach, along with careful evaluation of investment horizon and risk appetite, remains key when considering defence-themed mutual funds.
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.
Published on: Apr 12, 2026, 9:00 AM IST
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