HDFC Defence Fund will stop accepting new SIP registrations starting July 22

HDFC Mutual Fund revealed that it will stop accepting new systematic investment plans (SIPs) in HDFC Defence Fund starting from July 22. Only SIPs and transactions logged before July 22 will be handled.

HDFC MF stated that SIPs registered before the effective date will still be processed, but lumpsum and STP in the scheme will remain limited. Previously recorded systematic transactions will proceed as planned without any limitations on withdrawals or transfers.

The HDFC Defence Fund is known for its high concentration, comprising 21 stocks. The fund's portfolio consists of the top five stocks, which make up 63 percent of the total. Because of the fund's characteristics, it focuses on mid-and small-cap stocks.

Experts believe that the decision to halt new investments was likely made because of restricted liquidity and limited investment choices, to protect the fund's portfolio.

The fund puts a minimum of 80 percent of its total assets into companies in the defense and related industries. Stocks in aerospace and defense, explosives, shipbuilding, and related services are classified under the defense and allied sectors.

The investment company stated that the program focuses on firms led by competent management teams with proven success and strives for diversification through a multi-cap approach. The fund invests in large, mid-, and small-cap stocks, prioritizing growth, quality, and reasonable valuations.

In a world with multiple power centers, countries are expected to boost their defense capabilities, leading to a rise in global defense spending. Strong emphasis on research and development, along with improved manufacturing capacities, allows Indian companies to cater to both the local market and explore extensive export opportunities, boosting self-sufficiency in defense. During the fund's launch, Abhishek Poddar, who is the Fund Manager for Equity and Senior Equity Analyst at HDFC AMC, noted that this could provide a long-term investment opportunity spanning decades.