Best Defence Sector Mutual Funds In September 2025 Based on AUM

India’s defence sector remains a key investment theme as the country advances its goals of self-reliance, modernisation, and higher export targets. With supportive government initiatives and consistent demand for indigenous technology, defence focused funds continue to attract investor inflows.

In this article, we’ll explore the leading Defence Sector Mutual Funds as of September 2025, ranked by their Assets Under Management (AUM), expense ratio, and tracking error.

Best Defence Sector Mutual Funds in September 2025

Note: The Defence Sector Mutual Funds listed above are sorted as per the AUM as of August 22, 2025.

Key Takeaways

• HDFC Defence Fund leads the category with the highest AUM of ₹6,497.99 crore but has the highest tracking error at 7.64%.
• Motilal Oswal Nifty India Defence Index Fund balances scale and efficiency, with AUM of ₹3,495.93 crore and the lowest tracking error at 0.16%.
• Aditya Birla SL Nifty India Defence Index Fund remains the most cost-effective option with the lowest expense ratio of 0.31%.

Read More: Top Mutual Funds for September 2025 That Delivered Highest Returns in the Last 10 Years.

Conclusion

Defence sector mutual funds remain an attractive theme for investors, supported by India’s rising domestic production and export ambitions. While most of these funds are still relatively young , key parameters like AUM, expense ratio, and tracking error help evaluate their suitability.

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 are subject to market risks. Read all scheme-related documents carefully.