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HDFC Defence Fund has delivered 42% annual returns since inception. A look at its journey so far
6 min read | Updated on July 27, 2026, 15:47 IST
SUMMARY
Even though the HDFC Defence Fund has delivered strong returns since its launch, its performance can swing sharply under different market conditions,
Here's how HDFC Defence fund has performed since launch.
This article examines the scheme's performance journey so far and highlights key things investors should know about it.
Before reading further, please note this exercise is intended solely for educational and informational purposes and should not be construed as advice to invest in this scheme. Thematic funds like HDFC Defence Fund can be extremely volatile and may not suit every investor's risk profile. It is always better to consult a SEBI-approved financial advisor before investing in such schemes.
Return journey
The scheme is currently managed by Rahul Baijal and is benchmarked against the Nifty India Defence - TRI.
The direct plan of HDFC Defence Fund was launched on June 2, 2023, and currently manages assets worth over ₹10,000 crore.
Over the past three years, the fund has witnessed several quarters of negative returns. However, it has also delivered double-digit returns in many quarters.
It recorded -7.5% return in Q2 FY 2025-26 and Q2 FY 2024-25. In Q4 FY26 and Q4FY25, it posted -6.6% and -7.22% returns, respectively. However, the scheme delivered 42.97% return in Q1 FY25, 35.7% in Q1 FY27, 30.40% if Q1 FY26 and 27.94% in Q3 FY24.
Interestingly, the first quarter of every financial year has been particularly strong for this fund. The table below shows the scheme's quarterly performance since inception:
| Financial Year | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2026-2027 | 35.70 | |||
| 2025-2026 | 30.40 | -7.50 | -1.04 | -6.60 |
| 2024-2025 | 42.97 | -7.55 | -0.82 | -7.22 |
| 2023-2024 | 17.55 | 27.94 | 8.24 | |
| 2022-2023 |
The direct plan of HDFC Defence Fund touched a 52-week high NAV of 30.91 on June 22, 2026, and a 52-week low NAV of 22.48 on March 31, 2026. As of July 24, 2026, the scheme's NAV was 30.20.
The scheme's returns relative to the benchmark, along with its category rank over different periods since inception till July 24, 2026, are as follows:
| Period | Returns | Benchmark | Rank |
|---|---|---|---|
| 3 Months | 11.73 | 5.82 | 5/120 |
| 6 Months | 30.27 | 24.82 | 1/115 |
| 1 Year | 23.24 | 15.24 | 1/106 |
| 3 Years | 40.95 | 48.44 | 1/51 |
| 5 Years | NA | ||
| Since Inception | 42.11 | 1/121 |
Despite volatility, this scheme managed to grow a monthly SIP of ₹5,000 to ₹2.76 lakh in three years ending July 24, 026.
| Period | Total investment (₹) | Scheme (₹) | Benchmark |
|---|---|---|---|
| 1 Year | 60,000 | 71,723 | 69,227 |
| 3 Years | 1,80,000 | 2,76,366 | 2,90,204 |
| 5 Years | NA | NA | NA |
| 10 Years | NA | NA | NA |
What does the scheme's portfolio look like?
As of June 30, 2026, the scheme's portfolio was spread across small-, mid-, and large-cap stocks. It has 41.67% allocation towards large-cap stocks, 24.69% in mid-cap, and 31.47% in small-cap stocks. Equity made up 97.84% of the portfolio.
The top 10 stocks in the scheme's portfolio were the following:
| Name | (%) |
|---|---|
| Bharat Electronics | 14.86 |
| Bharat Forge | 14.56 |
| Hindustan Aeronaut. | 11.34 |
| Solar Industries Ind | 11.33 |
| Astra Microwave Prod | 6.89 |
| MTAR Technologies | 5.43 |
| BEML | 4.85 |
| Bharat Dynamics | 4.22 |
| Eicher Motors | 3.70 |
| Premier Explosives | 3.57 |
What is the key risk investors should know?
Even though the HDFC Defence Fund has delivered strong returns since its launch, its performance can swing sharply under different market conditions, depending on the performance of the defence sector stocks in which it invests. This volatility is evident from the scheme's best and worst return periods since launch, as shown in the tables below.
| Period | Date range | Fund(%) | Benchmark(%) |
|---|---|---|---|
| Month | 05-06-24 to 05-07-24 | 27.73 | 41.07 |
| Quarter | 20-03-24 to 20-06-24 | 55.49 | 65.98 |
| Year | 05-07-23 to 05-07-24 | 147.04 | 208.44 |
| Period | Date range | Fund(%) | Benchmark(%) |
|---|---|---|---|
| Month | 17-01-25 to 18-02-25 | -18.66 | -19.67 |
| Quarter | 28-11-24 to 28-02-25 | -26.49 | -23.27 |
| Year | 29-07-24 to 29-07-25 | -1.45 | 1.84 |
The scheme's volatility measures show a beta of 0.91, a standard deviation of 1.73, a sharpe ratio of 0.06 and Fama of 0.01, indicating the fund has been slightly less volatile than the market till now. However, its risk-adjusted performance metrics do not indicate a substantial outperformance relative to the risk assumed. The scheme has also underperformed the benchmark over three years.
A thematic scheme is usually preferred by investors who are very sure about the future performance of the theme it is tracking. However, for other investors, it may be too risky to invest in.
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