HDFC Asset Management Company (AMC) has launched HDFC Defence Fund, a first-of-its-kind Defence Fund in India. It plans to invest in defence and allied sector companies. The Fund will follow a bottom-up approach of portfolio construction within the defence ecosystem
This new fund offer (NFO) opened today, May 19, 2023, and will close on June 2, 2023. “HDFC Defence Fund will seek to invest in companies with good quality management with demonstrated track record and aim to achieve diversification by following a multi-cap strategy. The Fund’s focus would be on growth and quality at reasonable valuations by investing across large, mid and small-cap stocks,” HDFC AMC said
According to HDFC AMC, defence as a sector, sees a constant need to modernise its platforms due its strategic relevance for the country and technological advancements. Through initiatives like Make in India, government policies remain conducive to the growth of the defence sector in the country
HDFC AMC aims to invest a minimum of 80% of the corpus in shares of defence and allied sector companies. The scheme will be managed by Abhishek Poddar and the performance of the scheme will be benchmarked against Nifty India Defence Index TRI
Defence and allied sector stocks include:
(i) Stocks forming part of certain eligible ‘basic industries’ based on AMFI Industry classification including aerospace and defence, explosives, shipbuilding and allied services
ii) Stocks from any other defence and allied sectors as per the benchmark’s criteria
(iii) Stocks present on SIDM (Society of Indian Defence Manufacturers) list; and which obtain at least 10% of revenue from the defence segment
The scheme will be managed by Abhishek Poddar- Fund Manager – Equity and Senior Equity Analyst, Dealing & Investments, HDFC Asset Management Company Limited who has over 17 years of experience in equity research, investment banking, and corporate finance
"In a multipolar world, defence expenditure globally is set to increase as countries enhance their defence capabilities. Self-reliance in defence led by strong R&D focus and enhancement of manufacturing capabilities creates opportunity for Indian companies to serve domestic market as well as tap large export potential. This could offer a multi-decadal investment opportunity," said Abhishek Poddar
HDFC Defence Fund will seek to invest in companies with good quality management with demonstrated track records and aim to achieve diversification by following a multi-cap strategy
The Defence Fund’s focus would be on growth and quality at reasonable valuations by investing across large, mid, and small cap stocks. The fund follows the Nifty India Defence Index as its benchmark
The Nifty India Defence Index had 13 stocks as of April 28, 2023, of which 10 were from the small and microcap universe. Some of these stocks are likely to be a part of the HDFC Defence Fund portfolio. With limited investment opportunities in the large-cap space, the HDFC defence MF will likely manage a mid- and small-cap heavy portfolio
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