India’s military offensive, Operation Sindoor, launched against Pakistan in May 2025, has brought the nation’s defence sector into sharp focus. This strategic move triggered strong momentum in defence-related stocks, and mutual funds tracking this sector have seen renewed traction. Investor sentiment has been notably bullish, pushing several defence mutual funds into the top performance charts for the year.
Amid the geopolitical developments and a supportive policy environment, the following mutual funds have delivered impressive returns on a year-to-date basis. These funds are aligned with the Nifty India Defence Index and are gaining attention for their consistent performance.
| Fund Name | AUM (in ₹ crore) | Expense Ratio (%) | Fund Type | Inception Date | Benchmark Index | NAV (₹) | YTD Return (%) |
| Motilal Oswal Nifty India Defence Index Fund | 2,875.5 | 1.08 | Open Ended | 03 July 2024 | Nifty India Defence - TRI | 10.43 | 22.42 |
| Aditya Birla SL Nifty India Defence Index Fund | 461.5 | 1.06 | Open Ended | 30 August 2024 | Nifty India Defence - TRI | 11.41 | 22.12 |
| HDFC Defence Fund | 5,487.3 | 1.8 | Open Ended | 02 June 2023 | Nifty India Defence - TRI | 23.18 | 7.7 |
These funds provide investors with exposure to a diversified set of companies in the defence industry, including defence equipment manufacturers, aerospace firms, and technology providers. Their recent performance reflects not only market dynamics but also broader structural trends.
Read More: Defence Sector ETFs Surge: Top Funds Deliver Above 18% Returns in May.
India’s defence sector has not just grown domestically but also expanded its global footprint. In FY14, defence exports were reported at ₹686 crore. By FY25, this figure surged to ₹23,622 crore, showcasing a remarkable 34-fold increase.
This exponential growth highlights the strengthening of India’s indigenous defence manufacturing and the country’s emergence as a significant player in the global arms market. It is a clear indicator of policy success and rising trust in Indian defence capabilities worldwide.
Looking ahead, the Ministry of Defence has announced an ambitious target of achieving ₹50,000 crore in defence exports by 2029. This vision is expected to drive innovation, manufacturing scale-up, and strategic partnerships in the sector. If realised, this goal will mark a major milestone in India’s defence modernisation journey.
The outperformance of defence mutual funds in 2025 is a reflection of both short-term triggers and long-term transformation. While events like Operation Sindoor draw immediate attention, it is the consistent growth in exports and policy backing that are shaping the sector’s future trajectory.
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.
Published on: May 21, 2025, 3:02 PM IST
Team Angel One
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