HDFC MF not to accept lumpsum investments in Defence Fund

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The HDFC Mutual Fund, one of the largest fund houses, has halted massive investments in the recently launched HDFC Defense Fund due to a lack of investment opportunities.

The plan was launched on May 19th and the new fund offering closed on May 30th.

There are no new SIPs

New major investments, including switching, will not be allowed. However, new monthly registrations for the Systematic Investment Plan will be allowed up to SAR 10,000 per investor. The Fund will not register any new Systematic Transfers (STPs) in the system.

However, regular transactions registered before Monday will continue to be processed. In addition, there will be no restrictions on callbacks for investors who wish to exit their positions.

The HDFC Defense Fund is the first defense-focused scheme Which aims to increase capital by investing in shares of companies operating in the defense and allied sectors.

Finance House has restricted subscriptions to the scheme due to the limited number of defense sector shares available for investment and protection for existing investors.

A unique problem for thematic funds

Gaurav Singh, a mutual fund investor, said that this problem is unique to thematic funds that make investment based on specific ideas without studying the market.

“One wonders, how could one of the oldest funding houses come up with such a narrow subject even without access to the investment opportunity. Besides, why did the regulator SEBI give permission for this fund?” he asked.

The HDFC Defense Fund is benchmarked against the Nifty India Defense Index which contains only 13 stocks. Most of the defense sector stocks rose significantly. The chart contains 21 stocks, many of which are medium and small-cap companies.

Stock wheeze

The average return of the top 10 stocks in the Nifty Defense Index was 91 percent with three stocks yielding returns of over 100 percent – Mazagon Dock (275 percent), Data Patterns (147 percent), and Garden Reach (105 percent). ) ).

Data Patterns, a provider of defense and aerospace electronics solutions, closed at $1,743 on Monday. The company recorded revenue of ₹185 crore and net profit of ₹55 crore in the March quarter, though it had a net profit margin of 30 per cent.

Similarly, Garden Reach Shipbuilders had revenue of Rs.601 crore and net profit of Rs.55 crore in the March quarter. The company’s stake jumped 11 percent to INR 565 on Monday.