The HDFC Defence Fund, an open-ended thematic fund launched on June 2, 2023, has delivered exceptional returns since its inception. According to ACE MF data, the direct plan has achieved a compounded annual growth rate (CAGR) of 42% since inception till July 24, 2026. The scheme currently manages assets worth over ₹10,000 crore and ranks first among peers across performance periods ranging from six months to three years. The fund is managed by Rahul Baijal and is benchmarked against the Nifty India Defence - TRI.
The fund's performance shows a distinct seasonal pattern, with particularly strong returns in the first quarter of each financial year. As reported by the source, the scheme delivered 42.97% return in Q1 FY25, 35.7% in Q1 FY27, 30.40% in Q1 FY26, and 27.94% in Q3 FY24. However, it recorded negative returns in Q2 FY2025-26 and Q2 FY2024-25 at -7.5% each, and posted -6.6% and -7.22% returns in Q4 FY26 and Q4 FY25 respectively. The fund's NAV touched a 52-week high of ₹30.91 on June 22, 2026, and a 52-week low of ₹22.48 on March 31, 2026, with current NAV at ₹30.20 as of July 24, 2026.
According to the latest portfolio data as of June 30, 2026, the scheme maintains a diversified allocation across market capitalizations with 41.67% in large-cap stocks, 24.69% in mid-cap, and 31.47% in small-cap stocks. Equity securities constitute 97.84% of the total portfolio. The top 10 holdings include Bharat Electronics at 14.86%, Bharat Forge at 14.56%, Hindustan Aeronautics at 11.34%, and Solar Industries Industries at 11.33%. The fund's volatility measures show a beta of 0.91, standard deviation of 1.73, and Sharpe ratio of 0.06, indicating slightly less volatility than the market.
Despite strong long-term returns, the fund's performance shows significant volatility across different time periods. As reported by the source, the scheme's best performance was 147.04% for the year ending July 2024, while its worst performance was -1.45% for the year ending July 2025. The fund has also underperformed the benchmark over three years. However, it has demonstrated strong SIP performance, growing a monthly SIP of ₹5,000 to ₹2.76 lakh over three years ending July 2026. The scheme's risk-adjusted performance metrics show a Fama score of 0.01, indicating minimal outperformance relative to the risk assumed.
