India is investing in defence. Are you? This is the tagline given by Motilal Oswal Nifty Defence Index Fund. Motilal Oswal has introduced India’s first and only Defence index fund India tracking the defence sector, Motilal Oswal India defence Index Fund. This defence index fund is a thematic index targeting defence sector stocks. Let’s understand the new Defence index fund together.
The Nifty Defence Index mirrors Indian Defence sector growth, attracting investors seeking diversification.
Table of Contents
Understanding the Nifty India Defence Index
The Nifty Defence Index is a specialised equity index that tracks the performance of stocks representing the defence sector in India.
The NSE Defence index has a base date of April 02, 2018, with a base value of 1000.
NIFTY India defence index has pure exposure to defence stocks. The fund provides investors with an opportunity to gain exposure to this strategically important and rapidly growing industry.
Nifty India Defence Index Returns
| Index Returns (%) | QTD | YTD | 1 Year | 5 Years | Since Inception |
| Price Return | 57.11 | 74.44 | 167.57 | 56.15 | 37.44 |
| Total Return | 57.16 | 75.11 | 169.52 | 58.42 | 39.43 |
Motilal Oswal Nifty India Defence Index Fund – NFO Details
NFO Period – 13th June 2024 – 24th June 2024
Type of scheme – An open ended fund replicating/tracking the Nifty India Defence Total Return Index
Minimum application amount –Lumpsum and SIP – ₹500/- and in multiples of Re 1/- thereafter
Benchmark- Nifty India Defence Total Return Index
Exit Load- 1% if redeemed before 15 days of allotment, nil thereafter
Fund Manager-Mr. Swapnil Mayekar (For Equity Component) Mr. Rakesh Shetty (for Debt Component)
Total Expense ratio -To be Announced
Why should I invest in the Nifty India Defence Index Fund?
Investing in the Nifty India Defence Index Fund allows you to:
- Benefit from the robust growth of the defence sector.
- Gain exposure to companies with strong government support and favourable policy initiatives.
- Invest in a sector with technological innovation and resilience against economic downturns.
- Align your portfolio with the nation’s strategic priorities.
Nifty 50 Vs Nifty India Defence Index
Nifty 50 Index Fund provides broad exposure to the top 50 companies across various sectors in India
Whereas, The Nifty India Defence Index Fund is focused exclusively on the defence sector.
Thus Nifty 50 is a broader index tracking top 50 stocks on index whereas Defence Index tracks highly specific stocks in defence sector only.
This way we can say that Nifty 50 Index is a comparatively less riskier investment as compared to Defence Index.
Top 10 Stocks of Motilal Oswal Nifty India Defence Index Fund
| Hindustan Aeronautics Ltd. Bharat Electronics Ltd. Solar Industries India Ltd. Bharat Dynamics Ltd. Cochin Shipyard Ltd. Mazagoan Dock Shipbuilders Ltd. Astra Microwave Products Ltd. Data Patterns (India) Ltd. Garden Reach Shipbuilders & Engineers Ltd. Mtar Technologies Ltd. | 21.9% 20.5% 13.7% 9.2% 9.0% 6.4% 4.7% 4.4% 2.7% 2.3% |
What are the risks associated with investing in the Nifty India Defence Index Fund?
Nifty India Defence Index Fund is a thematic index fund thus it is risky as compared to broader indexes such as Nifty 50 etc.
The primary risks include:
• Sector-specific risk: The fund’s performance is closely tied to the defence sector, which can be affected by changes in government policy, defence spending, and geopolitical factors.
• Market risk: The value of your investment can fluctuate based on market conditions and economic factors.
• Liquidity risk: Some defence companies may have lower liquidity, which could impact the fund’s ability to buy or sell shares.
How often is the Nifty India Defence Index reviewed and rebalanced?
The Nifty India Defence Index is reviewed and rebalanced semi-annually to ensure it accurately reflects the performance of the defence sector.
This process involves adjusting the index’s composition based on the latest market data and company performance.
Who should consider investing in the Nifty India Defence Index Fund?
The Nifty India Defence Index Fund is suitable for investors who:
- Seek exposure to a high-growth sector with strategic importance.
- Are looking for a diversified investment within the defence industry.
- Have a long-term investment horizon and can tolerate sector-specific risks.
- Wish to align their investment portfolio with national security and technological advancements.
Defence Index SIP Returns (SIP Amount Of Rs.10,000/- Per Month)
| Description | 1 Year | 3 Years | 5 Years |
| Returns | 198.0% | 103.4% | 77.5% |
| Amount Invested | 1,20,000 | 3,60,000 | 6,00,000 |
| Market Value | 2,27,026 | 12,88,544 | 35,56,606 |
Equity index funds and taxation
The nifty Defence Index is an equity mutual fund, that follows Equity taxation. The taxation of equity funds depends on the investment duration for which the investment is held. On the basis of the holding period is classified as STCG & LTCG.
Short-Term Capital Gains (STCG): If the holding period is less than a year, short-term capital gains tax is levied at a rate of 15%. Therefore if you redeem/sell your mutual fund units within a year of purchase, any profits will be taxed at 15%.
Long-Term Capital Gains (LTCG): If the holding period is more than a year, The gains are called as long-term capital gains.
The gains over and above Rs 1 lac are taxed at 10%.
Motilal Oswal India Defence Index Fund Review?
Motilal Oswal India Defence Index Fund tracks the Nifty defence Index, which is a focused investment in a stable sector with growth potential.
However, you must consider high sector-specific risks, limited diversification( since the index is investing in 10-12 companies only)and ethical implications before investing. The index fund performance may vary with Govt. policies or sector-specific risk. People who have good risk appetite can invest in Motilal Oswal defence fund.
