India’s semiconductor industry is entering a new phase of growth as the government accelerates efforts to build a complete domestic chip manufacturing ecosystem.
Under the Semicon India Programme 2.0, the focus has expanded beyond semiconductor fabrication to include chip design, advanced packaging, semiconductor equipment, specialty chemicals, research and talent development.
The government has already approved 12 semiconductor projects across six states, with three facilities commencing commercial production.
As India aims to build a US$ 200 billion (bn) domestic semiconductor market by 2035, industries such as electronics manufacturing, defence, electrical equipment, and industrial engineering are expected to benefit from this long-term structural opportunity.
Here we explore 3 mutual funds, their investment strategy, portfolio composition, and historical performance.
#1 Canara Robeco Infrastructure Fund
First is Canara Robeco Infrastructure Fund which is an open-ended equity scheme that primarily invests in companies operating across India’s infrastructure sector.
As of 30 June 2026, the fund managed Assets Under Management (AUM) of Rs 9,980.7 million (m), while its average monthly AUM stood at Rs 9,902.0 m.
In terms of risk and return metrics, the fund had a Standard Deviation of 19.85 and a Portfolio Beta of 0.70, indicating relatively lower volatility than the broader market. The Sharpe Ratio stood at 0.84, reflecting the fund’s risk-adjusted return profile.
The fund follows a thematic investment approach by investing primarily in infrastructure-related companies. Its portfolio has strong large-cap companies, with 67.20% of assets invested in large-cap stocks. Mid-cap companies account for 18.94% of the portfolio, while small-cap stocks contribute 9.88%. The remaining 3.98% are invested in debt, cash, and other assets.
Sector Allocation
The portfolio is diversified across multiple infrastructure-related sectors.
Top 10 Sector Holdings
| Industry Name | Percentage Allocation (%) |
| Electrical Equipment | 14.26% |
| Power | 10.84% |
| Construction | 10.05% |
| Industrial Products | 7.05% |
| Transport Services | 6.93% |
| Petroleum Products | 6.73% |
| Aerospace & Defense | 6.02% |
| Consumer Durables | 5.77% |
| Telecom – Services | 4.48% |
| Chemicals & Petrochemicals | 4.48% |
Source: Fund Factsheet
The allocation towards electrical equipment, power, industrial products and aerospace & defence provides indirect exposure to industries that support semiconductor manufacturing, electronics production, and the broader technology supply chain.
Top Stock Holdings
The fund has a portfolio turnover ratio of 0.19 times, indicating relatively low portfolio churn.
Top 5 Stock Holdings
| Stock Name | Portfolio Weightage (%) |
| Larsen & Toubro Ltd | 10.05% |
| CG Power and Industrial Solutions Ltd | 5.01% |
| Reliance Industries Ltd | 4.97% |
| Bharti Airtel Ltd | 4.48% |
| State Bank of India | 4.18% |
Source: Fund Factsheet
Companies such as CG Power, Bharat Electronics and Larsen & Toubro are involved in areas including industrial electronics, defence manufacturing, electrical equipment and engineering infrastructure, which could benefit as India’s semiconductor ecosystem expands.
Historical Performance
Let’s now look at the historical performance of a Rs 10,000 investment in the Regular Plan (G) Option compared with its benchmark, the BSE India Infrastructure TRI.
Growth of a Rs 10,000 Investment
| Period | Scheme CAGR (%) | Scheme Final Value (Rs) | Benchmark CAGR (%) | Benchmark Final Value (Rs) |
| 1 Year | 4.57% | Rs 10,457 | 0.71% | Rs 10,071 |
| 3 Years | 22.04% | Rs 18,188 | 26.58% | Rs 20,295 |
| 5 Years | 21.66% | Rs 26,666 | 22.93% | Rs 28,091 |
Source: Fund Factsheet
Over the medium term, the fund has delivered competitive returns while maintaining its focus on infrastructure-related businesses.
Over the one-year period, an investment of Rs 10,000 in the fund would have grown to Rs 10,457. Over three years, the same investment would have increased to Rs 18,188, while over five years it would have grown to Rs 26,666.
During the 3-year and 5-year periods, the benchmark delivered higher returns than the scheme.
#2 Motilal Oswal Flexi Cap Fund
The second one is Motilal Oswal Flexi Cap Fund, which is an open-ended equity scheme that invests across large-cap, mid-cap and small-cap companies. The fund follows a flexible investment strategy, allowing it to identify opportunities across different sectors and market capitalisations.
As of June 2026, the fund managed Assets Under Management (AUM) of Rs 132,944.2 m, while its average monthly AUM stood at Rs 130,194 m.
The fund reported an annualised Standard Deviation of 17.1%, indicating the level of volatility in its portfolio. Its annualised Sharpe Ratio stood at 1, while the Portfolio Beta was 1. The portfolio turnover ratio was 1.6, reflecting moderate portfolio activity during the period.
The fund follows Motilal Oswal’s “Buy Right: Sit Tight” investment philosophy by investing in businesses with long-term earnings growth potential. It maintains a relatively concentrated portfolio of around 32 companies across multiple sectors.
As of June 2026, the portfolio had a higher allocation towards large-cap stocks, which accounted for 41.3% of the portfolio. Mid-cap companies contributed 35.3%, while small-cap stocks represented 21.7%. The remaining 1.7% was invested in cash and other assets.
Sector Allocation
The portfolio is diversified across multiple industries, with electrical equipment being the largest sector allocation.
Top 10 Sector Holdings
| Sector Name | Percentage Allocation (%) |
| Electrical Equipment | 17.9 |
| Consumer Durables | 9.1 |
| Finance | 8.5 |
| IT – Software | 7.8 |
| Capital Markets | 7.7 |
| Automobiles | 6.7 |
| Banks | 5.6 |
| Retailing | 5.5 |
| Pharmaceuticals & Biotechnology | 4.3 |
| Aerospace & Defense | 3.7 |
Source: Fund Factsheet
The fund’s allocation towards electrical equipment, industrial manufacturing, telecom equipment and aerospace & defence provides indirect exposure to sectors that are expected to support India’s semiconductor manufacturing and electronics value chain over the long term.
Top Holdings
The fund follows a concentrated portfolio strategy. Its largest investments are spread across companies from different sectors.
Top 5 Stock Holdings
| Stock Name | Portfolio Weightage (%) |
| CG Power and Industrial Solutions Ltd. | 6.7 |
| Kalyan Jewellers India Ltd. | 6.6 |
| Eternal Ltd. | 5.5 |
| Coforge Ltd. | 4.7 |
| Shriram Finance Ltd. | 4.4 |
Source: Fund Factsheet
Among the top holdings, companies such as CG Power, Samvardhana Motherson and Dixon Technologies (held in the portfolio outside the top holdings) have exposure to the broader electronics manufacturing ecosystem, making them relevant from an indirect semiconductor perspective.
Historical Performance
Let’s look at how a one-time investment of Rs 10,000 in the Motilal Oswal Flexi Cap Fund (Regular Plan) would have grown over different investment periods compared with its benchmark, the Nifty 500 TRI.
Growth of a Rs 10,000 Investment
| Period | Scheme CAGR (%) | Benchmark CAGR (%) | Scheme Value (Rs) | Benchmark Value (Rs) |
| Last 1 Year | -7.84 | -1.71 | 9,216 | 9,829 |
| Last 3 Years | 17.79 | 12.92 | 16,350 | 14,403 |
| Last 5 Years | 11.91 | 12.4 | 17,562 | 17,945 |
| Since Inception | 15.62 | 14.01 | 58,556 | 49,413 |
Source: Fund Factsheet
Over the last one year, Rs 10,000 investment in the scheme would have declined to Rs 9,216. Over a three-year period, the same investment would have grown to Rs 16,350, outperforming the benchmark.
Over five years, Rs 10,000 would have grown to Rs 17,562, while since the fund’s inception, it would have increased to Rs 58,556, highlighting the potential of long-term investing despite periods of short-term market volatility.
#3 HDFC Defence Fund
The third one is the HDFC Defence Fund, which is an open-ended equity scheme that primarily invests in companies operating across the defence and allied sectors.
As of May 2026, the fund managed Assets Under Management (AUM) of Rs 97,242.7 m.
The fund reported a Standard Deviation of 31.697%, indicating relatively higher volatility due to its sectoral investment strategy. Its Beta was 0.824, while the Sharpe Ratio was 1.080, reflecting its risk-adjusted performance over the period.
As of May 2026, nearly half of the portfolio was allocated to large-cap companies (49.0%), followed by small-cap stocks (30.8%) and mid-cap companies (18.4%).
Sector Allocation
The portfolio has a significant allocation towards capital goods and automobile & auto components, reflecting its focus on defence manufacturing and industrial production.
Top Sector Holdings
| Industry | Allocation (% to NAV) |
| Capital Goods | 60.60% |
| Automobile and Auto Components | 21.60% |
| Chemicals | 15.30% |
| Construction | 0.80% |
Source: Fund Factsheet
Top Holdings
The fund reported a portfolio turnover ratio of 13.2% during the period.
Top 5 Stocks Holdings
| Company | % to NAV |
| Bharat Electronics Ltd. | 15.48% |
| Bharat Forge Ltd. | 14.39% |
| Hindustan Aeronautics Limited | 12.06% |
| Solar Industries India Ltd. | 11.97% |
| MTAR Technologies Limited | 6.08% |
Source: Fund Factsheet
Companies such as Bharat Electronics, MTAR Technologies and Astra Microwave Products operate in defence electronics, electronic systems and precision manufacturing, making them part of the broader ecosystem that supports semiconductor-based technologies.
Historical Performance
Growth of a Rs 10,000 Investment
| Period | Scheme Return (%) | Benchmark Return (%) | Additional Benchmark Return (%) | Scheme Value (Rs) | Benchmark Value (Rs) | Additional Benchmark Value (Rs) |
| Last 1 Year | 14.85 | 7.88 | -5 | 11,485 | 10,788 | 9,458 |
| Last 3 Years (CAGR) | 42.5 | 52.67 | 9 | 29,967 | 35,624 | 12,882 |
| Since Inception (CAGR) | 42.05 | 56.37 | 10 | 29,471 | 39,616 | 13,347 |
Source: Fund Factsheet
The table below illustrates how a one-time investment of Rs 10,000 in the HDFC Defence Fund Regular Plan (G) would have grown over different investment periods compared with its benchmark.
Over the last one year, a Rs 10,000 investment in the scheme would have grown to Rs 11,485, compared with Rs 10,788 in the benchmark.
Since the fund’s launch in June 2023, the same investment would have grown to Rs 29,471, while the benchmark investment would have reached Rs 39,616.
Should You Consider Semiconductor Mutual Funds?
India’s semiconductor ecosystem is still at an early stage, but increasing government support, manufacturing incentives and growing demand for electronics are creating long-term opportunities across several industries.
However, investors should remember that the funds discussed in this article are not dedicated to semiconductor mutual funds.
Their performance will depend on the overall performance of their respective sectors and portfolio companies, rather than the semiconductor industry alone.
Before making any financial decision, investors should carefully evaluate the fund’s investment objective, historical performance, risk profile, and how it fits within their overall financial goals.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here…
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