Top Defense Sector Mutual Funds in India to Invest in Today

A good portfolio is one which includes a proper mix of assets that help you with growth and wealth creation. This is why investors usually prefer to keep a mix of fixed deposits, mutual funds, stocks, and other investments in the portfolio.

But recently, there has been a rise in the demand for thematic mutual funds. These funds invest in companies working in one sector only. This allows not only for better management but also offers a good sectoral exposure as well. One such option is the defense sector mutual funds in India.

But the question is, which are the top defense sector mutual funds in India? Also, why should you invest in this today? Well, let us explore every detail you need in the guide here. 

What Is a Defense Sector Mutual Fund

A defense sector mutual fund is a thematic equity fund. It invests mainly in companies linked to defense and aerospace. These funds focus on businesses that make defense equipment, build warships, supply technology, or support government defense projects.

Since the sector is driven by long-term government spending, these funds aim to benefit from steady orders and rising demand for advanced security systems. They suit investors who want focused exposure to a growing sector. 

On the riskometer, this ranges from average to high in general. These are perfect for those who are comfortable with sector-specific risks.

Features

• Follow a thematic structure that focuses on one high-growth sector.

• Includes only defence-linked companies.

• Concentrated portfolio of limited stocks. 

• Aim for long-term capital growth.

• High volatility due to one sector inclusion.

Pros

• Benefit from rising government investment in defense.

• Good option for focused sectoral growth.

• Can outperform diversified funds during strong defense cycles.

• Helps add a unique theme to your equity allocation.

Cons

• High risk because the portfolio depends on one sector.

• Returns can fall if defense spending slows.

• Not for short-term investors.

• Limited diversification as compared to other hybrid funds or equity funds.

Top Defense Sector Mutual Funds in India

If you are looking to invest in defense mutual funds, then it is important to compare and contrast all the options. Based on the same, the top defense sector mutual funds in India are as follows:

Note: This data is as of 4 Dec 2025 and is bound to change. Please check before investing.

1. HDFC Defence Fund Direct Growth

An actively managed equity fund focused on Indian defense, aerospace, and manufacturing companies. It seeks long-term growth by selecting high-potential businesses across the defense value chain. The fund aims to benefit from steady government contracts and rising demand for modern defense technologies.

2. Motilal Oswal Nifty India Defence Index Fund Direct Growth

It is a passive index fund. It is the fund that follows the Nifty India Defence Index. It offers straightforward exposure to leading defense companies. The fund suits investors who want a low-cost and rules-based option. Also, this is linked to India’s expanding defense manufacturing ecosystem, which is a great benefit.

3. Aditya Birla Sun Life Nifty India Defence Index Fund Direct Growth

A systematic index-based fund that invests in a basket of major defense and aerospace companies. It follows the same defense index, making it suitable for investors who want consistent sector coverage with a disciplined structure and predictable allocation across all index constituents.

4. Groww Nifty India Defence ETF FoF Direct Growth

It is a fund of funds that invests in a defence-focused ETF. It provides simple access to the sector without needing a demat account. This is perfect for those who are new and are looking for budget-friendly options. This is passive and concentrated in nature.

Who Should Invest in Defense Sector Mutual Funds

Investing in a single sector needs clarity, patience, and the ability to handle sharp ups and downs. Defense funds can add strong thematic growth to a portfolio, but only when the investor’s risk profile and goals support this focused approach.

• Suitable for long-term investors looking for sector-specific opportunities.

• Good for those who already hold diversified equity funds.

• Fits investors who believe in India’s growing defense manufacturing story.

• Works for people with a high risk appetite.

• Not meant for short-term or conservative investors.

Conclusion

Defense sector mutual funds give investors a focused way to benefit from India’s growing defense and aerospace industry. This is perfect for those who are looking to invest for long-term. But being sector-specific in nature, they carry certain risks too. Hence, proper analysis before investing is a must. 

This is where you can use Rupeezy. This platform offers you expert guidance and all the tools that you need to make sure that you invest right. So, register today and start comparing funds to invest properly and earn good returns. 

FAQs

Are defense sector mutual funds risky?

Yes. They carry a high risk because performance depends on one sector.

What is the ideal time horizon for these funds?

Investors should stay invested for 5-7 years if they are looking to benefit from the defense projects. 

Who should avoid defense mutual funds?

Investors who are looking for short-term plans or prefer low-risk options should avoid these funds.

How much should I invest in defense funds?

There is no thumb rule on how much you should invest, but for stability and good portfolio building, you can invest 5-10% of your portfolio.

Do defense sector mutual funds offer diversification?

No. They focus on one sector. Hence, for portfolio stability, you must invest in other equity funds too.