HDFC Mutual Fund, the mutual fund arm of India’s largest private sector bank, HDFC, has announced a significant update regarding its Defence Fund.
Starting from July 22, the company will stop accepting new investments in this scheme. This includes new Systematic Investment Plans (SIPs), lump sum investments, and systematic transfer plans.
Reason for the Decision
On July 9, HDFC Mutual Fund disclosed that the decision to halt new investments was due to the fund’s highly concentrated nature.
The HDFC Defence Fund, launched on June 2, 2023, has a substantial concentration, with 63 percent of its weight spread across just five stocks out of a total of 21.
The fund’s primary focus is on defense and related companies. Despite its initial success, with an AUM of ₹3,665.95 crore and a return of approximately 144 percent over the past year, the decision to halt new investments is driven by concerns over limited liquidity and fewer investment options.
Impact on Existing Investors
Existing investors in the HDFC Defence Fund need not worry. While new investments will cease from July 22, the fund will continue to accept investments from current investors.
Existing SIPs and other investments will remain unaffected, allowing investors to continue their investment and withdrawal activities as usual.
The fund’s strong performance and stability ensure that current investors can maintain their investment strategies without disruption.
