The scheme aims to deliver returns, before expenses, that correspond to the performance of the underlying index, subject to tracking error. It will follow a passive investment strategy by replicating the index constituents.
According to the fund details, the scheme will be benchmarked to the Nifty India Defence TRI and managed by Nandik Mallik and Rohit Gautam. The minimum application amount has been set at ₹100, with investments allowed in multiples of ₹1 thereafter. An exit load of 0.25% will apply if units are redeemed or switched out within 15 days from allotment; no exit load will be charged after this period.
The underlying index comprises companies deriving a significant share of their revenues from defence-related activities, including segments such as aerospace and defence equipment, shipbuilding, explosives, and allied services. The index follows a free-float market capitalisation weighting methodology with caps and is rebalanced semi-annually.
The launch comes amid sustained growth in global and domestic defence spending. Worldwide defence expenditure has crossed an estimated $2.7 trillion in 2024, driven by geopolitical tensions and evolving security priorities. In India, defence allocation has increased to about ₹6.8 lakh crore in FY26, nearly 2.7 times higher than FY14 levels, reflecting continued policy focus on military modernisation.
Domestic defence production has nearly doubled over the past five years, with official targets to expand further by 2029. Defence exports have also risen significantly, from below ₹2,000 crore in FY17 to over ₹23,000 crore in FY25, indicating increased global demand for Indian defence products.
As a sectoral index fund, the scheme is expected to mirror the performance of defence-focused companies and may carry higher volatility compared to diversified equity funds, particularly in the short to medium term.