HDFC Mutual Fund filed a Planning Information Document (SID) with SEBI for India’s first defense fund – HDFC Defense Fund – an open-ended equity scheme that will invest in defense and allied sector companies.
Allied sectors include Aerospace, Explosives, Shipbuilding, Industries/Stocks present in the SIDM (Society of Indian Defense Manufacturers) list or other similar industries/stocks allied to the Defense Sector.
The scheme invests in companies by market capitalization and will use a bottom-up approach to identify companies. Further, to achieve diversification, the scheme may invest up to 20% of the assets in companies other than defense and allied sector companies.
The fund will be benchmarked to the recently introduced Nifty India Defense Index TRI (Total Return Index). The top constituents of the index based on weightage are Solar Industries India, Bharat Electronics, Hindustan Aeronautics, BEML, MTAR Technologies, Astra Microwave Products, Bharat Dynamics, Cochin Shipyard, Mazagon Dock Shipbuilders and Garden Reach Shipbuilders & Engineers. In terms of sector representation, the industrial manufacturing and chemical sectors make up for 79 percent and 21 percent of the portfolio, respectively.
The scheme’s portfolio will include companies that are not only constituents of the benchmark index but also other companies that are classified/covered under the defense sector.
Note, since the scheme is a sectoral fund, the investment intensity is likely to be high.
The fund will be primarily managed by Abhishek Poddar. Minimum subscription will be during NFO period as well as continuous offer period 5,000
The launch of the scheme by the fund house will be subject to the approval of SEBI.
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