HDFC Mutual Fund, on May 23, said that the closing date of the New Fund Offering (NFO) of its first defence sector fund in India, the HDFC Defence Fund (HDF) has been shifted to an earlier date from June 2 to May 30. The NFO was launched on May 19.
Market sources told Moneycontrol that the number of stocks and investment options are limited. And hence, a reasonable inflow in its NFO period will suffice for the fund.
Via the NFO, HDF aims to invest a minimum of 80 percent of the corpus in shares of defence and allied sector companies. 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, as amended from time to time; or (ii) Stocks from any other defence and allied sectors as per the benchmark’s criteria; or (iii) stocks present on SIDM (Society of Indian Defence Manufacturers) list; and which obtain at least 10 percent of revenue from the defence segment.
The scheme is being managed by Abhishek Poddar and the performance of the scheme will be benchmarked against Nifty India Defence Index TRI.
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Further, the investment strategy of the fund focuses on “growth and quality at reasonable valuations” and the fund manager will invest in companies of all sizes.
As on April 28, 2023, the benchmark had 13 constituents. Hindustan Aeronautics and Bharat Electronics each had almost 20 percent allocation. Solar Industries, the third largest stock, has 18 percent weight. The universe for HDF comprises 21 stocks and 80 percent of the scheme money will have to be invested in some of these stocks.