Riding high on growing interest in thematic investment in the defence sector, Groww Asset Management Company has filed paper with SEBI to launch ‘Nifty India Defence ETF’.
The scheme targets to generate long-term capital growth by investing in securities of the Nifty India Defence Index in the same weightage with an aim to provide returns before expenses that track the total return of Nifty India Defence Index.
The Nifty Defence Index has 15 stocks with top three stocks – Bharat Electronics, Hindustan Aeronautics and Solar Industries – accounting for 53 per cent. The index is designed to reflect the performance of defence companies operating in manufacturing and servicing defence projects.
Defence funds
Motilal Oswal AMC’s recently-launched Defence Index Fund collected ₹1,676 crore during its new fund offer period between June 13 and 27. The scheme will reopen for further subscription and redemption from July 9.
However, the actively-managed HDFC Defence Fund had to restrict inflows due to problem in finding avenues for investment at right valuations. The scheme is currently accepting investment through SIPs only. The passively-managed defence ETF will not face valuation issue as it has to deliver returns equivalent to the index.
India’s defence output increased to ₹1.27-lakh crore in FY24 against ₹1.08-lakh crore in FY23, marking the country’s highest-ever rise. The value of defence output has climbed over 60 per cent in FY20.
The interim Budget of FY25 has allocated ₹6.21-lakh crore, a jump of 4.72 per cent over previous year. The Ministry of Defence has set a target of achieving a turnover of ₹1.75-lakh crore in aerospace and defence manufacturing by 2025, which includes exports of ₹35,000 crore.