Fresh SIP registrations shall not be accepted from July 22HDFC Mutual Fund on July 9 announced that it will discontinue registering fresh systematic investment plans (SIPs) in HDFC Defence Fund from July 22.
While SIPs registered prior to the effective date shall continue to be processed, lumpsum and STP in the scheme will continue to be restricted, HDFC MF said.
Story continues below Advertisement Remove AdThe HDFC Defence Fund is considered to be highly concentrated fund, with 21 stocks.
Due to the nature of the fund, it is a mid- and small- cap oriented fund.
Defence and allied sector stocks include stocks forming part of aerospace and defence; explosives, shipbuilding and allied services.
Fresh SIP registrations shall not be accepted from July 22
HDFC Mutual Fund on July 9 announced that it will discontinue registering fresh systematic investment plans (SIPs) in HDFC Defence Fund from July 22. It will only process SIPs and transactions registered before July 22.
While SIPs registered prior to the effective date shall continue to be processed, lumpsum and STP in the scheme will continue to be restricted, HDFC MF said. Systematic transactions already registered will continue to be processed, and there will be no restrictions on redemptions or switch outs.
Story continues below Advertisement Remove Ad
The HDFC Defence Fund is considered to be highly concentrated fund, with 21 stocks. Top five stocks constitute 63 percent of the fund’s portfolio. Due to the nature of the fund, it is a mid- and small- cap oriented fund.
The decision was most likely taken due to limited liquidity and investment options, said experts while adding that the fund management has decided to stop fresh inflows so as to not compromise the portfolio.
Also Read: A surgical strike: HDFC MF launches defence-themed fund. Should you invest?
The fund invests at least 80 percent of its net assets in defence and allied sector companies. Defence and allied sector stocks include stocks forming part of aerospace and defence; explosives, shipbuilding and allied services.
The asset management firm said that the scheme invests in companies with good quality management with demonstrated track record and aims to achieve diversification by following a multi-cap strategy. The fund focuses on growth and quality at reasonable valuations by investing across large, mid and small cap stocks.
"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," Abhishek Poddar - Fund Manager, Equity and Senior Equity Analyst, Dealing and Investments at HDFC AMC had said at the time of launching of this fund.
Story continues below Advertisement Remove Ad
The scheme is managed by Poddar and the performance of the scheme is benchmarked against Nifty India Defence Index TRI.
(With agency inputs)
