HDFC Defence Fund
Direct · GrowthAI Summary
The HDFC Defence Fund has delivered exceptional returns, with a 1-year XIRR of 38.91% and a 3-year XIRR of 30.90%, significantly outperforming the category averages of 14.1% and 16.82% for the same periods. Over the 1-year horizon, the fund's CAGR of 33.11% stands in stark contrast to the NIFTY 50's -2.9%, highlighting its strong performance in a weak market. The fund has also posted robust calendar year returns, including 53.02% in 2023 and 41.18% in 2024, though 2025 was relatively muted at 9.78%.
The fund exhibits high volatility, with a beta of 1.08 (1Y) and 1.20 (3Y) against the NIFTY 50, indicating it amplifies market movements. Its maximum drawdown is -0.35%, with a drawdown duration of 235 days and an average recovery time of 88 days, suggesting moderate drawdowns that are recovered relatively quickly. The Calmar ratio of 1.08 (1Y) and 1.22 (3Y) indicates strong risk-adjusted returns, as the fund generates substantial returns relative to its drawdown risk.
The fund is highly concentrated in the defense and aerospace sector, with top holdings like Bharat Electronics (14.67%), Hindustan Aeronautics (12.37%), and Bharat Forge (14.82%) dominating the portfolio. Sector concentration is extreme, with Aerospace & Defense alone accounting for 44.7% of assets, followed by Auto Components at 18.9%, making the fund heavily dependent on defense-related themes. With only 22 total holdings, the fund offers limited diversification, and the top 10 holdings constitute a significant portion of the portfolio, increasing stock-specific risk.
The fund significantly outperforms its category peers, with a 1-year XIRR of 38.91% versus the category average of 14.1%, and a 3-year XIRR of 30.90% versus 16.82%. This consistent outperformance is also reflected in its high alpha of 36.73% (1Y) and 34.35% (3Y) relative to the benchmark, indicating strong stock selection and sector timing. However, the fund's performance is highly dependent on the defense sector's momentum, which may not be sustainable if the sector faces headwinds.
This fund is suitable for investors with a high risk tolerance and a long-term investment horizon of at least 5-7 years, given its sectoral concentration and volatility. It is best suited for those who have a strong conviction in the Indian defense and aerospace sector's growth story and can withstand significant drawdowns. Investors should limit this fund to a small portion of their overall portfolio to manage sector-specific risk, and it is not recommended for conservative or short-term investors.
- Exceptional XIRR performance, with 1-year and 3-year returns of 38.91% and 30.90%, respectively, far exceeding category averages.
- Strong upside capture (126-134%) and downside capture (83-95%) versus the NIFTY 50, indicating the fund participates more in market gains while losing less in downturns.
- High alpha generation across all time frames, with 1-year alpha of 36.73% and 3-year alpha of 34.35%, showcasing skilled management.
- Extreme sector concentration in Aerospace & Defense (44.7%) and top-heavy holdings, leading to high vulnerability to sector-specific downturns.
- Elevated volatility (beta >1) and a maximum drawdown of -0.35% with a 235-day duration, which may test investor patience during prolonged market corrections.
Generated on 30-08-2026, 3:03 AM. Verify before investing.
Gives more importance to longer time periods (10Y, 20Y) than shorter ones (1Y, 3Y). This balances out recent outperformance and gives a more realistic picture of what long-term returns might look like.
The largest peak-to-trough decline in the fund's NAV. Shows the worst-case loss an investor would have experienced at any point in the fund's history.
If you invested ₹1,00,000 every month via SIP, here's how this fund has historically performed across different time horizons.
| Duration | Invested | Median Value | XIRR | Min XIRR | Max XIRR |
|---|---|---|---|---|---|
| 1 Year | ₹12.00 L | ₹13.60 L | 38.9% | -39.0% | 181.0% |
| 3 Years | ₹36.00 L | ₹54.58 L | 30.9% | 27.4% | 34.5% |
SIP returns vs benchmark & category
Annualised SIP return (XIRR) over each rolling horizon — like-for-like, not lump-sum.
| Duration | Fund SIP XIRR | NIFTY 50 | Category avg | Fund edge |
|---|---|---|---|---|
| 1 Year | 38.9% | 14.4% | 14.1% | +24.5% |
| 3 Years | 30.9% | 11.1% | 16.8% | +19.8% |
| Duration | Mean | Median | Min | Max | Sharpe | Sortino | % Positive | Cat. Mean | Cat. Median |
|---|---|---|---|---|---|---|---|---|---|
| 1 Year | 37.4% | 21.9% | -1.4% | 147.0% | 0.84 | 24.11 | 99% | — | — |
| 3 Years | 42.2% | 41.8% | 39.4% | 45.1% | 23.16 | — | 100% | — | — |
Calmar Ratio by Duration
Compared against NIFTY 50
| Duration | Alpha | Beta | Upside Capture | Downside Capture | Fund CAGR | Bench CAGR |
|---|---|---|---|---|---|---|
| 1 Year | +36.73 | 1.08 | 126.0% | 83.3% | 33.1% | -2.9% |
| 3 Years | +34.35 | 1.20 | 133.8% | 94.8% | 42.4% | 7.8% |
| 5 Years | +21.05 | 1.18 | 130.5% | 90.3% | 26.2% | 5.4% |
| 7 Years | +14.75 | 1.18 | 130.5% | 90.3% | 18.1% | 3.8% |
| 10 Years | +10.38 | 1.18 | 130.5% | 90.3% | 12.3% | 2.6% |
| 12 Years | +8.75 | 1.18 | 130.5% | 90.3% | 10.2% | 2.2% |
| 15 Years | +7.14 | 1.18 | 130.5% | 90.3% | 8.1% | 1.8% |
| # | Stock | % of NAV |
|---|---|---|
| 1 | Bharat Forge Ltd. | 14.82% |
| 2 | Bharat Electronics Ltd. | 14.67% |
| 3 | Hindustan Aeronautics Limited | 12.37% |
| 4 | Solar Industries India Ltd. | 10.95% |
| 5 | Astra Microwave Products Ltd. | 7.16% |
| 6 | BEML Limited | 4.74% |
| 7 | Eicher Motors Ltd. | 4.03% |
| 8 | MTAR Technologies Limited | 4.01% |
| 9 | Bharat Dynamics Limited | 3.80% |
| 10 | Mazagon Dock Shipbuilders Ltd | 3.34% |