Best Defence Sector Mutual Funds in December 2025 Based on 1-Yr Returns

India’s defence sector continues to attract investor interest as the country accelerates its indigenous manufacturing, advanced technology adoption, and export expansion.

In this article, we analyse the leading Defence Sector Mutual Funds as of December 2025, ranked by 1-year absolute returns, along with their expense ratios, tracking errors, and a brief scheme overview.

Best Defence Sector Mutual Funds in December 2025 Based on 1-Year Returns

Note: The data above is as of Dec 2, 2025 and is ranked as per 1-year returns.

Detailed Fund-wise Breakdown

1. Motilal Oswal Nifty India Defence Index Fund

Motilal Oswal tops the category with a 19.85% 1-year return, reflecting robust performance in India's fast-expanding defence sector.

Key Metrics

• Expense Ratio: 0.44%
• Tracking Error: 0.11%

2. Aditya Birla SL Nifty India Defence Index Fund

Aditya Birla’s defence index fund delivered a 19.26% 1-year return, closely following the category leader.

Key Metrics

• Expense Ratio: 0.31%
• Tracking Error: 0.14%

3. HDFC Defence Fund

HDFC Defence Fund recorded a 9.13% 1-year return. Despite the relatively lower return, the fund appeals to investors seeking long-term capital appreciation through an active strategy rather than index replication.

Key Metrics

• Expense Ratio: 0.78%
• Tracking Error: 5.90%

Best Defence Mutual Funds in December 2025 Based on AUM

Note: The data above is as of Dec 2, 2025 and is ranked as per AUM.

Read More: Best Lab-Grown Diamond Stocks in December 2025: Mini Diamonds, Sky Gold, Goldiam & More – 5Y CAGR Basis.

Conclusion

Defence sector mutual funds continue to gain traction among investors, supported by India’s long-term push toward self-reliance and modernisation. As with any thematic investment, these funds should be evaluated carefully based on risk appetite, investment horizon, and overall portfolio goals rather than short-term returns alone.

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.

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