Have you ever thought about growing your money by investing in India’s defence power? With the government increasing the defence budget by over 13% in 2025, and a growing push for “Make in India” defence manufacturing, many investors are now eyeing the best defence mutual fund options as a smart and future-ready choice.
In this blog, we’ll simplify everything for you—what defence mutual funds are, why they matter now more than ever, which ones are performing well, and how you can get started step-by-step.
Below is a list of the best defence mutual funds in India for 2025, based on their Assets Under Management (AUM). These funds are gaining popularity due to their focus on India's defence and aerospace sectors.
| Top Defence Mutual Funds in India | AUM (Approx.) |
|---|---|
| 1. HDFC Defence Fund | ₹4,975.51 Cr |
| 2. Motilal Oswal Nifty Defence Index Fund | ₹2,875.46 Cr |
| 3. Aditya Birla Sun Life Nifty Defence Index Fund | ₹391.11 Cr |
| 4. Groww Nifty India Defence ETF Fof Fund Direct - Growth | ₹34.12 Cr |
These funds focus on India’s fast-growing defence sector, investing in companies like Hindustan Aeronautics, Bharat Electronics, and other top defence manufacturers.
These funds focus on companies involved in the defence and aerospace sectors, giving investors a chance to benefit from the country's growing military and tech advancements. Below is an overview of some of the top defence mutual funds in India you should know about.
One of the first and most popular defence sector mutual funds in India, HDFC Defence Fund aims to provide long-term capital growth by investing in companies involved in defence and allied sectors. It holds stocks from aerospace, weapon manufacturing, communication systems, and more.
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This passively managed fund aims to mirror the performance of the Nifty India Defence Index, giving investors exposure to India’s top defence companies. It's known for low expense and strong recent returns.
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This fund also tracks the Nifty India Defence Total Return Index and focuses on giving returns similar to the top defence-related companies in India. It’s a newer entry but growing steadily in AUM and popularity.
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This fund-of-fund (FoF) invests in the Groww Nifty India Defence ETF, giving indirect exposure to the defence sector. It’s ideal for those who prefer ETFs but want to invest through a mutual fund route.
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The defence sector in India is not only expanding—it's booming. With the Indian government increasing its defence budget by over ₹6 lakh crores in 2025 and pushing the Make in India movement across defence manufacturing, the sector is drawing strong investor attention.
Defence sector mutual funds allow everyday investors to benefit from this massive transformation. These funds invest in companies involved in making fighter jets, missiles, radars, surveillance systems, and cybersecurity tools. As global tensions and border security issues increase, defence-related companies are expected to grow in value.
Also Read: 10 Best Defence Stocks in India 2025
Picking the right defence mutual fund doesn't have to be complicated—you just need to match the fund with your goals and comfort level.
Here’s how to do it:
Choosing the best defence fund isn’t about finding the one with the highest return—it’s about finding the one that fits your journey.
Many new investors ask: “Should I buy individual defence stocks or go for defence mutual funds?” The answer depends on your experience and comfort level with the stock market.
If you have the time and knowledge to track companies like HAL, BEL, or Bharat Dynamics, investing in defence stocks might give you higher control and potential gains. But remember—it also comes with higher risk and the need to monitor the market regularly.
On the other hand, defence mutual funds offer a more balanced approach. You get diversification, expert fund management, and exposure to a basket of defence-related stocks without picking them yourself.
👉 Want to learn more about the defence stocks in India? Read our in-depth guide on the best defence stocks to invest in now.
The defence space in India and globally is changing fast, and these trends are pushing mutual fund investors to pay close attention.
The sector isn't just about war and weapons anymore—it's about technology, innovation, and national strength, making it a powerful investment theme for the future.
Investing in the best defence mutual fund is now easier than ever with multiple online platforms available. Whether you’re starting a SIP or going for a lump sum, choosing the right platform ensures a smooth experience.
Lakshmishree – A fast-growing, investor-friendly stock broker with direct mutual fund access.
How to Invest in Defence Mutual Funds with Lakshmishree:
With Lakshmishree, you're not just investing—you’re growing with expert support by your side.
Also Read: 10 Best Defence Stocks in India 2025
Defence mutual funds are emerging as one of the most powerful investment options in 2025. With India boosting its defence budget and private companies entering the space, defence sector mutual funds offer strong long-term potential. Funds like HDFC Defence Fund and Motilal Oswal Nifty Defence Index Fund are gaining momentum due to their focus on innovation, national security, and self-reliance.
If you're planning to invest in a future-focused theme, choosing the best defence mutual fund could be a smart move—especially when supported by trusted platforms like Lakshmishree.
Yes, there are several mutual funds in India that specifically invest in the defence sector. These funds are called defence mutual funds or defence sector mutual funds. They focus on companies involved in aerospace, military equipment, defence manufacturing, and related technologies.
Some of the top defence mutual funds in 2025, based on AUM and recent performance, are HDFC Defence Fund, Motilal Oswal Nifty Defence Index Fund, and Aditya Birla Sun Life Nifty Defence Index Fund. These funds offer exposure to India’s leading defence companies and have shown strong returns in recent months.
Defence sector mutual funds are considered high-risk, high-reward investments. Since they focus on a specific theme, they are more volatile compared to diversified mutual funds. However, for long-term investors with a higher risk appetite, these funds can offer strong growth potential, especially with India’s increasing defence spending.
Yes, you can easily start a SIP (Systematic Investment Plan) in HDFC Defence Fund. It allows you to invest a fixed amount every month, making it suitable for investors who want to enter the defence sector gradually. SIPs also help manage market volatility and average your investment cost over time.
HDFC Defence Fund is one of the leading mutual funds focused on the defence sector in India. It has shown solid returns since its launch in June 2023 and has a large AUM, reflecting investor trust. Managed by experienced professionals, it’s a strong option for those looking to invest in the defence and allied industries.
Aditya Birla Sun Life Nifty India Defence Index Fund is a relatively new fund but has performed well in its initial months. It tracks the Nifty India Defence Index and offers low-cost exposure to top defence companies. It’s a good choice for investors looking for passive investing with defence sector exposure.
Defence mutual funds are taxed like other equity mutual funds. If you sell your investment within one year, you’ll pay a 20% short-term capital gains tax. If you hold the investment for more than one year, gains above ₹1 lakh are taxed at 12% as long-term capital gains.
Disclaimer: This article is intended for educational purposes only. Please note that the data related to the mentioned companies may change over time. The securities referenced are provided as examples and should not be considered as recommendations.
