Aditya Birla Sun Life AMC launches Defence Index Fund: Who should invest

The performance of the Aditya Birla Sun Life Nifty India Defence Index Fund will be benchmarked against Nifty India Defence Total Return Index

Aditya Birla Sun Life AMC has announced the launch of an open-ended index fund that will track the Nifty India Defence Index. Aditya Birla Sun Life Nifty India Defence Index Fund aims to capitalise on the growing defence sector.

 

The launch comes at a time when India's defence sector is undergoing a significant transformation, driven by the government's push for self-reliance and modernisation, said the company in a press release.

 

With a defence budget of Rs 6.22 trillion and a projected compound annual growth rate of 15 per cent in capital expenditure between FY24-30, the sector presents a “compelling investment opportunity”. The fund offers investors exposure to a diverse range of companies contributing to India's defence capabilities, including those involved in manufacturing, aerospace, shipbuilding and defence electronics.

 

 

"The government has significantly increased its investment in the defence sector to meet internal needs, reduce import dependence and produce for the rising global demand. The sector features high barriers to entry due to its capital-intensive nature and the continuous evolution of product types," said A Balasubramanian, managing director & chief executive officer of Aditya Birla Sun Life AMC.

 

Here are details about Aditya Birla Sun Life Nifty India Defence Index Fund

 

Scheme name: Aditya Birla Sun Life Nifty India Defence Index Fund. The new fund offer (NFO) opened for subscription on August 9 and will close on August 23, 2024.

 

Investment objective: The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of securities as represented by the Nifty India Defence Total Return Index, subject to tracking errors. The scheme does not guarantee/indicate any returns. There is no assurance or guarantee that the investment objective of the scheme will be achieved, said the AMC.

 

Type of scheme: Open-ended index fund.

 

Index construction: The scheme invests a minimum of 95 per cent in equity constituting the Nifty India Defence Index. The index’s constituents are selected from the universe of the 750 Nifty Total Market Index. A minimum of 10 stocks present in the Society of Indian Defence Manufacturers are selected and which obtain at least 10 per cent of revenues from the defence index. The weighting of stocks will be based on free float market capitalisation. There is a stock capping of 30 stocks and no single stock shall have a weight of more than 20 per cent.

 

Fund Manager: Fund will be managed by Haresh Mehta

 

Load Structure:

 

Lump sum: Minimum of Rs 500 and in multiples of Rs 100 thereafter.

 

Monthly / weekly systematic investment plan (SIP): Minimum of Rs 500 and in multiples of Re 1 thereafter.

 

Who should invest

 

This NFO of the Aditya Birla Sun Life Nifty India Defence Index Fund is suitable for investors who are seeking long-term capital appreciation and investment in equity and equity-related instruments with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy.

 

Investors are advised to consult with their financial advisors to determine if this fund aligns with their investment goals and risk tolerance before making any investment decisions, the company said.