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HDFC Mutual Fund announced the launch of the HDFC Defence Fund, an open-ended equity fund scheme that seeks to provide long-term capital appreciation by investing predominantly in equity and equity-related securities of Defence & allied sector companies.
The scheme opened for public subscription on May 19, 2023, and will close on June 02, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment.
Q. What kind of mutual fund scheme is this?
This is an open-ended equity scheme investing in defence & allied sector companies.
Q. What is the main objective of investing in this fund?
The scheme seeks to provide long-term capital appreciation by investing predominantly in equity and equity-related securities of defence and allied sector companies. There is no assurance that the investment objective of the scheme will be realized.
Q. How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Maximum | ||
Equity and Equity related instruments of Defence & allied sector Companies | 80% | 100% | Very High |
Equity and Equity related instruments of companies other than above | 0% | 20% | Very High |
Units of REITs and InvITs | 0% | 10% | Very High |
Debt securities, money market instruments and Fixed Income Derivatives | 0% | 20% | Low to Medium |
Units of Mutual Fund | 0% | 5% | Low to High |
Q. Are there similar mutual funds in the market?
To date, no asset management company (AMC) has launched any such fund in the past.
Q. How will the scheme benchmark its performance?
The performance of the scheme will be benchmarked against the Nifty India Defence Index (TRI). Since the scheme proposes to invest predominantly in defence and allied sector companies, the benchmark would be appropriate to compare the performance of the scheme.
The trustee reserves the right to change the benchmark for evaluation of the performance of the scheme from time to time in conformity with the investment objectives and appropriateness of the benchmark subject to SEBI (MF) Regulations, and other prevailing guidelines, if any by suitable notification to the investors to this effect.
Q. Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be calculated as under:
- In respect of each purchase/switch-in of units, an Exit load of one per cent is payable if units are redeemed/switched out within one year from the date of allotment.
- No Exit Load is payable if units are redeemed/switched out after a year from the date of allotment.
Q. Who will manage this scheme?
Abhishek Poddar is the designated fund manager of this scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.