HDFC Mutual Fund has said it will neither open new systematic investment plans (SIPs) nor accept lumpsum payments in its HDFC Defence Fund from July 22, 2024, due to valuation concerns. The fund house had already restricted lump sum payments soon after the scheme was launched in June 2023.
“Requests for fresh systematic investment plan (SIP) registrations in the scheme shall not be accepted with effect from July 22, 2024,” HDFC Mutual Fund said in a release. “Fresh lumpsum investments (including switch-ins) and fresh systematic transfer registrations into the scheme will continue to be restricted.”
It, however, added that SIPs and systematic transactions registered prior to July 22 will continue to be processed.
What is HDFC Defence Fund?
HDFC Defence Fund is an open-ended equity scheme investing in defence and allied sector companies. The scheme is benchmarked against Nifty India Defence Index TRI. The fund is managed by Abhishek Poddar and Dhruv Muchhal.
Also read: Fixed Deposits Vs Bonds: Which is better for you? Explained
HDFC Defence Fund returns:
This high-flying HDFC fund has given investors a whopping 136% return annualised in the last one year, beating comfortably the category average of 70.31%.
In the SIP category, HDFC Defence Fund’s return is even better with an impressive 159% in the last one year. With this return, Rs 10,000 monthly SIP would have turned into over Rs 2 lakh in 1 year.
HDFC Defence Fund details:
HDFC Defence Fund’s total assets under management stood at Rs 3,665 crore as of June 30, 2024.
Why did HDFC Mutual Fund restrict SIPs and lumpsum payments into the scheme?
HDFC Mutual Fund stopped taking new SIP registrations and also restricted lumpsum payments into HDFC Defence Fund inflows citing elevated valuations. The fund house felt that the scope for deployment of fresh funds shrank due to high valuations or other reasons.
In the recent past, there have been instances when many smallcap funds stopped taking new investments, including through SIP route.