HDFC Defence Fund Direct Growth Review 2026: NAV, Returns, Portfolio & Should You Invest?

HDFC Defence Fund Direct Growth Plan has a NAV of ₹31.725 as of 27 August 2026 and scheme AUM of ₹10,709 Cr. Its 1-year, 3-year and 5-year returns are 35.82%, 39.79% and Data not available, respectively. The scheme sits in the High Risk category, and our view is that it suits investors who can accept sharp swings for exposure to a defence-led equity theme rather than a broad market allocation.

The fund has outpaced the benchmark over the 1-year and 3-year periods, while the portfolio is tilted toward capital goods and other defence-linked businesses. That mix can support strong upside when the theme is in favour, but it also makes the return path more dependent on a narrow set of sectors and holdings.

Quick facts

Particulars	Details
NAV	₹31.725
AUM	₹10,709 Cr
Expense Ratio	0.78%
Launch Date	02 Jun 2023
Min SIP	₹100
Risk Category	High Risk
Benchmark	Nifty 50
Fund Category	Equity
Exit Load	1% if units are sold within 1 year; nil after 1 year
Fund Managers	Rahul Baijal, Priya Ranjan

The fund is managed by Rahul Baijal and Priya Ranjan.

Source data date: as of 27 Aug 2026

Performance

Period	Fund return	Benchmark return
1M	6.20%	0.44%
3M	10.23%	2.31%
1Y	35.82%	-2.53%
3Y	39.79%	6.72%
5Y	Data not available	Data not available

The recent numbers show a strong continuation of positive momentum. Over 1 month and 3 months, the fund stayed well ahead of the benchmark, which tells us that the defence theme remained constructive even in shorter windows.

The longer view is also supportive. The 1-year return is well above the benchmark’s negative 1-year figure, and the 3-year return remains far stronger than the benchmark’s modest gain. That gap suggests the fund has not merely benefited from a single good month; it has held up across a fuller cycle since launch.

At the same time, the path has not been perfectly smooth. The return pattern through the year shows a few pullbacks and recoveries rather than a straight climb, which is consistent with a thematic equity fund tied to a narrow set of sectors. That means the fund can deliver strong upside, but investors should expect more variation than from a diversified large-cap equity strategy.

The absence of a 5-year return is not a concern by itself because the scheme is relatively new. It does, however, mean the present assessment is built mainly on shorter and medium-term history, not a full long-cycle record.

Source data date: as of 27 Aug 2026

Should you BUY or HOLD HDFC Defence?

A fund's past returns alone don't tell you whether you should buy it today or continue holding it.

The right decision depends on factors such as your current allocation, purchase price, risk profile, investment horizon and the role this fund plays in your overall portfolio.

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Peer comparison

Fund	1Y return	3Y return	5Y return
HDFC Defence Fund Direct Growth Plan	35.82%	39.79%	Data not available
ICICI Pru Strategic Metal and Energy Equity FoF Direct Growth Plan	82.46%	39.16%	Data not available
SBI Automotive Opportunities Fund Direct Growth Plan	35.50%	Data not available	Data not available
Aditya Birla SL Mfg. Equity Fund Direct Growth Plan	29.89%	23.54%	17.01%
Motilal Oswal Active Momentum Fund Direct Growth Plan	28.19%	Data not available	Data not available
Kotak Healthcare Fund Direct Growth Plan	28.01%	Data not available	Data not available

The 1-year comparison is mixed for the current fund. It trails the strongest peer in the set by a wide margin, but it is still ahead of several thematic and sector-focused peers that have delivered returns in the high-20s to mid-30s. That puts the fund in a competitive band without implying anything about ordering.

Over 3 years, the current fund is slightly ahead of the only peer with a comparable 3-year figure among the listed funds, while clearly ahead of the manufacturing fund that has a full 3-year record. The shorter and longer windows therefore tell slightly different stories: the 1-year reading shows there are peers with more explosive recent gains, while the 3-year reading shows the fund has compounded steadily enough to remain close to the strongest long-window comparables. This assessment is prepared by Uniapps Investment Adviser Pvt. Ltd. under SEBI Registered Investment Adviser registration INA000017639.

Source data date: as of 27 Aug 2026

Portfolio: where your money goes

Market-cap bucket	Allocation
Large cap	49.27%
Mid cap	19.03%
Small cap	28.73%
Other	2.97%

Sector	Weight	Key holdings
CAPITAL GOODS	58.04%	BHARAT ELECTRONICS LTD. (16.91%), HINDUSTAN AERONAUTICS LIMITED (12.45%)
AUTOMOBILE & ANCILLARIES	19.21%	BHARAT FORGE LTD. (13.53%), EICHER MOTORS LTD. (3.72%)
CHEMICALS	13.68%	SOLAR INDUSTRIES INDIA LTD. (10.6%), PREMIER EXPLOSIVES LTD. (3.08%)
ELECTRICALS	3.07%	CYIENT DLM LIMITED (2.61%)
SHIP BUILDING	2.53%	MAZAGON DOCK SHIPBUILDERS LTD (2.5%)

The portfolio has a near-balanced large-cap and small-cap mix, with large caps at 49.27% and small caps at 28.73%, while mid caps account for 19.03% and the rest sits in other exposures. That combination can support both stability from larger names and stronger theme-linked movement from smaller companies, but it also means the portfolio is not dominated by one style bucket.

Sector concentration is far more visible than market-cap balance. Capital goods at 58.04% is materially larger than automobile & ancillaries at 19.21% and chemicals at 13.68%, so the fund’s behaviour is likely to be shaped mainly by capital goods exposure. In practice, that makes the biggest holdings in this bucket especially important for near-term performance.

The main takeaway is that this is a focused defence-oriented portfolio rather than a broad sector spread. Capital goods may have the greatest influence on returns, while the other sectors can add diversification at the margin. For investors, that concentration can be a source of strong upside when the defence cycle remains supportive, but it can also make the fund more sensitive to changes in one part of the market.

Source data date: as of 27 Aug 2026

Who should invest

This fund is best suited to investors who are comfortable with High Risk equity exposure and who can stay invested for a longer horizon. The 1-year and 3-year figures show that the strategy has been able to beat the benchmark, but the ride is uneven and theme-dependent, so short holding periods may not capture the full payoff.

It fits investors who want a defence-focused allocation and can accept concentrated sector exposure in exchange for the possibility of stronger theme-led returns. The trade-off is clear: better upside potential than a broad index-style allocation, but a higher chance of larger swings because the portfolio is heavily centred on capital goods and other defence-linked names.

Tax and exit load

Holding period	Tax rate	Description
Units held less than 1 year	20%	Short-term capital gains tax
Units held more than 1 year	12.5%	Long-term capital gains tax

Exit load

• 1% if units are sold within 1 year.
• Nil after 1 year.

Source data date: as of 27 Aug 2026

Frequently asked questions

What is the current NAV of HDFC Defence Fund Direct Growth Plan?
The current NAV is ₹31.725 as of 27 August 2026.

What are the fund’s 1-year and 3-year returns?
The fund’s 1-year return is 35.82% and its 3-year return is 39.79%.

Is there a 5-year return available?
No. A 5-year return is not available for this scheme yet.

How does the fund compare with the benchmark?
It has outperformed the Nifty 50 over 1 year, 3 years, 3 months and 1 month. The benchmark’s 1-year figure is -2.53%, while the fund’s is 35.82%.

What is the minimum SIP amount?
The minimum SIP amount is ₹100.

Who manages the fund and what is the exit load?
The fund is managed by Rahul Baijal and Priya Ranjan. The exit load is 1% if units are sold within 1 year and nil after 1 year.

Bottom line

HDFC Defence Fund Direct Growth Plan has shown stronger medium-term performance than its benchmark, and the recent 1-year run remains well ahead of the index as well. The absence of a 5-year record means the fund is still building history, but the available track record is consistent with a theme-led equity strategy that can compound well when the underlying sector stays in favour. Its concentrated capital-goods-heavy portfolio and High Risk label make it more suitable for investors who understand and accept that trade-off.

Published on 28 August 2026 at 10:50 AM IST

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RIA disclosure

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. This review is prepared by Uniapps Investment Adviser Pvt. Ltd. (earlier known as Uniapps Global Research Pvt. Ltd.) under SEBI Registered Investment Adviser registration INA000017639 for general informational purposes and is not personalized investment advice.