HDFC Mutual Fund Halts Fresh SIP Registrations

HDFC Mutual Fund has announced it will discontinue registering fresh systematic investment plans (SIPs) in the HDFC Defence Fund starting from July 22. Transactions and SIPs registered before this date will still be processed.

However, the scheme’s lumpsum investments and Systematic Transfer Plans (STPs) will continue to be restricted. Systematic transactions already registered will proceed as usual, and redemptions and switch-outs will be unrestricted.

Reason Behind the Decision by HDFC Mutual Fund:

HDFC Mutual Fund’s decision to stop fresh SIP registrations in the highly concentrated HDFC Defence Fund aims to maintain liquidity and preserve the fund’s investment options.

The fund holds 21 stocks, with five stocks constituting 63% of its portfolio. As a mid and small-cap-oriented fund, limiting fresh investments helps to avoid compromising the portfolio’s structure and performance.

HDFC Defence Fund focuses on investing at least 80% of its net assets in companies related to the defense and allied sectors. This includes aerospace, defense, explosives, shipbuilding, and allied services stocks.

Insights from the Fund Manager

Abhishek Poddar, Fund Manager and Senior Equity Analyst at HDFC AMC, previously highlighted the strategic importance of the defense sector. He stated, “In a multipolar world, defense expenditure globally is set to rise as nations enhance their defense capabilities.

Self-reliance in defense led by strong R&D focus and enhancement of manufacturing capabilities creates opportunities for Indian businesses to serve the domestic market and tap the big export potential.”

Poddar emphasized that this sector could present a multi-decadal investment opportunity. The scheme is benchmarked against the Nifty India Defence Index TRI and is managed by the Investments team under Poddar’s guidance.

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