HDFC Defence Fund to halt new SIP registrations from July 22

The highly concentrated fund has 21 stocks of which 5 constitute 63 per cent of the fund’s portfolio.

HDFC Mutual Fund announced that it will discontinue registering fresh systematic investment plans (SIPs) in HDFC Defence Fund from July 22. Those SIPs and transactions registered before July 22 will be processed, it said, although lumpsum and STP in the scheme will continue to be restricted. HDFC MF said that systematic transactions already registered will continue to be processed and there will be no restrictions on redemptions or switch outs.

HDFC MF said that systematic transactions already registered will continue to be processed and there will be no restrictions on redemptions or switch outs. (Getty Images/iStockphoto)

Why has the decision been taken by HDFC Mutual Fund?

The highly concentrated fund has 21 stocks of which 5 constitute 63 per cent of the fund’s portfolio. It is a mid- and small- cap oriented fund and the decision to stop fresh SIP registrations in it could likely be focussed at limiting liquidity and investment options and not compromise the portfolio.

What you need to know about HDFC Defence Fund?

HDFC Mutual Fund invests at least 80 per cent of its net assets in defence and allied sector companies- stocks forming part of aerospace, defence, explosives, shipbuilding and allied services.

Abhishek Poddar - Fund Manager, Equity and Senior Equity Analyst, Dealing and Investments at HDFC AMC had earlier said, “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 (Research and Development) focus and enhancement of manufacturing capabilities creates opportunity for Indian companies to serve the domestic market as well as tap large export potential."

“This could offer a multi-decadal investment opportunity,” he asserted at the time of launching of this fund. The scheme is managed by Investments Poddar and the performance of the scheme is benchmarked against Nifty India Defence Index TRI.