From the effective date, the fund will no longer accept new Systematic Investment Plan (SIP) registrations.
Fresh lumpsum investments, including switch-ins and new Systematic Transfer Plan (STP) registrations, will continue to be restricted.
However, SIPs and STPs registered before the effective date will continue without interruption.
Investors will still be able to redeem or switch out their investments without any restrictions.
These changes will be reflected in the Scheme Information Document (SID) and Key Information Memorandum (KIM), and form an integral part of these documents.
Background of the HDFC Defence Fund
The HDFC Defence Fund mobilized ₹1,000 crore during its New Fund Offer (NFO).
It is the only active mutual fund in India focused on investments in defense-related companies.
Managed by Abhishek Poddar and Dhruv Muchhal, the fund is benchmarked against the Nifty India Defence Index TRI.
Previous restrictions
In June 2023, the fund had restricted lumpsum investments while allowing monthly SIPs up to ₹10,000 per investor.
This measure was likely implemented to manage the high inflow and maintain the fund’s performance standards.
Reasons behind the changes
When asked about the reasons for these changes, HDFC Mutual Fund declined to provide additional comments to CNBC TV18.com.
However, it is likely that the discontinuation of lumpsum investments and restrictions on systematic transactions are strategic moves to manage the fund’s growth and performance.
The high inflow during the NFO and subsequent interest may have necessitated these measures to ensure the fund remains within its optimal capacity for effective management.
Impact on investors
For existing investors, the continuation of SIPs and systematic transactions means their investment strategies will not be disrupted.
However, new investors looking to enter the fund via SIPs or lumpsum investments will have to look at alternative funds or wait for further updates from HDFC Mutual Fund.
