Thematic Funds: HDFC Defence Mutual Fund Jumps 14%, Invesco PSU Fund Gains 11.4% in March

The Nifty 50 index has witnessed a sharp recovery, surging over 1,000 points from its March 4, 2025, low and surpassing the 23,000 mark on March 20. This rebound has provided a much-needed boost to oversold stocks and sectors, triggering a sharp rally in specific themes such as Defence and Public Sector Undertaking (PSU) stocks.

Defence and PSU Stocks Rally

Defence and PSU stocks have been at the forefront of this market resurgence, experiencing substantial gains. Many stocks within these sectors, which had previously corrected, have now rebounded significantly, contributing to the broader market uptrend. Consequently, thematic mutual funds focused on these sectors have also delivered robust returns.

HDFC Defence Fund: Leading the Charge

One of the standout performers in the thematic mutual fund category has been the HDFC Defence Fund. This fund primarily invests in equity and equity-related securities of companies within the Defence and allied sectors, aiming for long-term capital appreciation. However, like any investment scheme, there is no assurance that its objective will be realised.

• March 2025 Performance: As of March 19, 2025, the fund has delivered an impressive 14% return for the month.
• Net Asset Value (NAV): ₹18.41
• Assets Under Management (AUM): ₹3,880.5 crore (as of February 28, 2025)
• Historical Trends: The fund’s NAV had peaked in July 2024 at ₹24.7 before declining to ₹16.20. 

Invesco India PSU Equity Fund

Another strong performer in the thematic mutual fund category is the Invesco India PSU Equity Fund. This fund aims to generate capital appreciation by investing in equity and related instruments of companies where the central or state government holds a majority stake or management control.

• March 2025 Performance: The fund has delivered an 11.4% return so far in March.
• NAV: ₹54.98
• AUM: ₹1,046.7 crore (as of February 28, 2025)
• Inception Date: November 18, 2009
• Since Inception Return: 11.58%

The strong rally in Defence and PSU stocks has translated into notable gains for thematic mutual funds. While these funds have shown substantial short-term performance, their future trajectory will depend on various market dynamics, including policy support, sectoral growth, and overall economic trends.

As always, thematic funds carry sector-specific risks, and past performance may not necessarily indicate future returns. Investors tracking such themes may need to assess long-term trends before making allocation decisions.

Conclusion

The bounce in the Nifty index has revitalised thematic investments, particularly in the Defence and PSU segments. With funds like HDFC Defence Fund and Invesco India PSU Equity Fund delivering double-digit returns in March, thematic investing remains an area of interest in the evolving market landscape. However, as with any investment, due diligence and a clear understanding of market conditions remain key to navigating sectoral opportunities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.