Best Defence Sector Mutual Funds for 2025

As you may be well aware, India’s defence sector is on a robust growth trajectory. This makes it an interesting time to invest in thematic defence funds. If done right, they can be strategic value additions to your portfolio. Let us look at the best defence mutual funds currently worth investing.

Best Defence Sector Mutual Funds 2025

The best defence sector mutual funds in 2025 may help you earn good returns. They deploy investments in sectors closely linked to national security. These include defence manufacturing and aerospace, allowing you to contribute to the sectors that play a vital role in the growth of India’s defence infrastructure. 

Let us look at the list of defence mutual funds in India available for investing at present. 

Note - Data as of 28th May, 2025

Now that you are aware of the top fund choices available, let us examine some of their basic details below. 

Overview of the Funds 

Here is an overview of the top defence mutual funds for your perusal. 

Motilal Oswal Nifty India Defence Index Fund Direct Growth

• Very high risk category 
• 1-month return - 26.11%
• NAV (as of 28th May, 2025) - ₹11.43
• Minimum SIP amount - ₹500
• Fund Size - ₹2,875.46Cr 
• Expense Ratio - 0.31%
• Exit Load - 1% if redeemed within 15 days

Aditya Birla Sun Life Nifty India Defence Index Fund Direct Growth 

• Very high risk category 
• 1-month return - 26.10%
• Minimum SIP amount - ₹500
• Fund Size - ₹461.46Cr
• NAV (as of 28th May, 2025) - ₹12.49
• Expense Ratio - 0.31%
• Exit Load - 0.05% if redeemed within 30 days 

Groww Nifty India Defence ETF FoF Direct Growth

• Very high risk category 
• 1-month return - 25.85%
• NAV (as of 28th May, 2025) - ₹12.90
• Fund Size - ₹39.29Cr 
• Minimum SIP Amount - ₹500
• Expense Ratio - 0.21%
• Exit Load - 1% if redeemed within 30 days 

Things to Consider While Investing in Defence Funds 

There are several aspects worth considering while investing in defence mutual funds. Some of them include: 

• Geopolitical & Government-related Risks - Defence stocks are often vulnerable to geopolitical risks that may arise at any time. These include border tensions and sudden escalations of conflicts. At the same time, there are government-linked risks, such as policy changes, which may also impact the performance of these stocks. Several regulatory hurdles are also present, which you have to be aware of. 
• Economic Volatility - Defence funds may also be vulnerable and demonstrate volatility during economic uncertainty. 
• Key Indicators - Always analyse the fundamental aspects of the fund, including historical performance, exit load, expense ratio, and fund management expertise, before investing. 
• Budget Allocation and Delays - Any reduction in defence budgets or spending by the government may impact these funds, along with any delays in big-ticket defence projects. 

Conclusion

Of course, investing in the best defence mutual funds can help you diversify your portfolio and gain exposure to a sector that may do well even during economic downturns owing to consistent spending by the Government.

Defence funds represent a strategic investment that focuses on the securities of companies involved in India’s defence sector and related infrastructure development. They can be relatively stable owing to Government spending (which has only increased over time). However, you should consider all the factors listed above before finalising your investment. 

Disclaimer: This content is solely for educational purposes. The securities/investments quoted here are not recommendatory.