HDFC Defence Fund to stop lumpsum investment, limit new SIPs to Rs 10,000

Fund to stop taking lumpsum investments, limit new SIPs to Rs 10,000

HDFC Mutual Fund is set to discontinue lumpsum investments in its newly launched Defence Fund from next week. The fund house has also announced that it will restrict the maximum monthly investments via systematic investment plan (SIPs) at Rs 10,000 for new investors from 12 June.

HDFC MF will also suspend registration of new systematic transfer plans in the scheme.

In the past, some fund houses have imposed similar restrictions on select schemes to ensure judicious deployment of funds. These restrictions are brought in when fund managers foresee a limited capacity for orderly deployment of fresh funds in a particular strategy or theme. Such restrictions are currently present in SBI smallcap fund and Mirae Asset emerging bluechip fund.

The HDFC Defence Fund is the only MF scheme in India which predominantly invests in stocks of defence and allied sectors including aerospace and shipbuilding. The new fund offer (NFO) for the scheme opened on May 19, 2023 and closed on May 30, 2023.

Though the defence sector has grown substantially in India in the last few years, the number of listed companies remains fairly limited. At the time of launch, the fund had an investment universe of just 21 stocks and majority of them were smallcaps.