Nifty Defence Index Fund: Why 2024-25 saw losses

Social media threads around the Nifty India Defence Index Fund category have focused on one point - many investors expected a smooth theme rally after the July 2024 launches, but saw sharp drawdowns instead. The discussion intensified because different screenshots and trackers show different return figures for the same broad theme. Some posts highlight a negative since-launch number for the Motilal Oswal Nifty India Defence Index Fund, while other datasets show a positive since-inception CAGR by mid-2026. What is not disputed in the shared context is that the underlying defence index went through a deep fall from its peak after July 2024. It also experienced strong short bursts of upside, which made timing and entry price unusually important. Below is a fact-only breakdown of what the shared data points show, and how Reddit-style confusion can happen.

What investors bought in July 2024

The Motilal Oswal Nifty India Defence Index Fund is described as a passive fund that tracks the Nifty India Defence Total Return Index (TRI). The scheme launch date in the shared material is 03-07-2024, and a reopen date is also mentioned as 09-Jul-2024. The fund is positioned as a way to get exposure to companies linked to India’s defence theme through a single product. It is open-ended, with an exit load of 1% if redeemed within 15 days of allotment and nil thereafter. The total expense ratio shown is 0.47% (as on 31-05-2026). Another shared metric shows very low turnover of 0.28%, consistent with an index-tracking approach. These features matter because in a volatile theme, friction costs like TER and exit load get noticed more.

Mid-2026 fund snapshots show modest gains, not a straight line

Multiple NAV points appear across the shared context, which is a key reason people argue about “real” performance. One dataset shows NAV of 12.2198 as on 08-Jul-2026 with a one-day change of -0.21 or -1.68%. Another snapshot from an aggregator shows NAV around 11.9672 as of Jun 16, 2026 with a 1-day change of +0.01%. The same source lists “returns since inception” at 5.73% per annum and a fund size (AUM) of ₹4,856 crore as on May 31, 2026. It also lists periodic returns for that point in time, including 1 month 1.95%, 3 months 13.82%, 6 months 23.78%, and 1 year 2.67%. Separately, the structured return feed shows one-year returns around 4.9% for one plan entry and 4.24% for another. It also shows inception returns around 9.72% and 8.96% with corresponding “inception market value” numbers, suggesting a positive total return from start to the referenced date. Investors comparing a negative social post with these mid-2026 positives are often looking at different measurement windows.

The index drawdown after July 2024 is the anchor fact

A widely repeated data point in the context is that the Nifty India Defence index was down 29% from its 52-week peak on July 11, 2024. That drawdown, by itself, explains why theme funds saw negative returns across several trailing periods in certain snapshots. Another set of numbers shows the index trading range over the past 52 weeks as 7,184.90 to 9,784.60. The same block also states that over the past 12 months, the index changed by 9.60%, indicating a positive year-on-year move despite deep interim volatility. A separate “daily” range block shows levels between roughly 9,582.90 and 9,737.15 in a shorter window, highlighting how quickly the index can move. When an index rallies hard and then compresses, investors who enter near a peak feel losses even if the long-run theme remains intact. This is exactly the kind of path that triggers online debates about whether the theme is “broken” or simply mean-reverting. In the shared material, both sharp falls and sharp rebounds are present, depending on dates used.

Why social posts show “since launch -14%” while others show gains

One social post claims the Motilal Oswal Defence Index Fund delivered -14.14% since launch, while also stating the last 1-month return was +16.46% and last 3 months was +6%. In the same broader context, other sources show since-inception returns that are positive by mid-2026, including 5.73% per annum or around 8.96% to 9.72% total return, depending on the feed. These can all be simultaneously true if the calculations are done on different dates, use different start points (NFO allotment date vs reopening vs first business day NAV), or compare different plans. The context also includes a warning commonly shown on fund pages that past performance may or may not be sustained and future returns are not guaranteed. Another key reason is that theme indices can swing enough that a “since launch” number changes meaningfully between screenshots taken weeks apart. Investors often share the worst point of a drawdown to make a cautionary argument, while others share a recovery snapshot. The only safe conclusion from the provided data is that performance has been highly path-dependent.

Six-month and one-month drawdowns were a major trigger

A separate media-style excerpt in the context states that the Motilal Oswal Nifty India Defence Index Fund lost around 21.01% in the last six months in the referenced period. The same excerpt says HDFC Defence Fund lost around 18.85% over that period, and that in the last one month defence sector funds lost around 10.96% on average. It adds that Aditya Birla SL Nifty India Defence Index Fund lost 10.41% in the same one-month window and other funds lost between 10.18% and 10.40%. Another block also mentions a different one-month loss figure for Motilal Oswal at around 5.21%, showing that “last one month” depends on which month is being measured. It also notes that these schemes had negative returns over three months and nine months in that period, with three-month average loss of 8.20% and nine-month average loss of 0.97%. These numbers match the theme of sharp short-term volatility. They also explain why posts from 2024-25 often read more pessimistic than data snapshots from mid-2026.

Valuation compression was cited as the core reason

The shared context explicitly attributes the negative stretch to valuation compression in the defence index. One expert view quoted says that around the last budget period the Nifty India Defence index was trading at a trailing P/E of 65, significantly higher than the Nifty 500. It then says that over the past few months, valuation compression in the defence index resulted in negative returns. Separately, the same context notes that the index saw substantial gains in CY23 and the first half of CY2024. This sequence matters because fast rerating often sets up a later phase where returns are weak even if fundamentals are unchanged. Social discussions about “overvaluation” typically flare up in the compression phase, especially when theme funds are new and expectations are anchored to the prior rally. The context does not provide company-level earnings or order-book changes, so the valuation narrative is the only stated driver. Investors should therefore interpret the 2024-25 losses as largely multiple-driven in the shared material, not as proof that the theme ended.

What the periodic return table suggests about timing risk

One shared periodic return table (data as on 31 May 2026) shows how quickly returns can flip across horizons for the same fund. In that snapshot, 6-month return is 23.78% while 1-year return is only 2.67%. The same table shows 3-month return at 13.82% and 1-month at 1.95%, illustrating that a strong rally can be concentrated in a few months. The category average column in that snapshot is also mixed, including a negative 6-month category average of -0.71% and a negative 1-year category average of -0.44%. That gap helps explain why investors report very different experiences even within the same theme, depending on which product and timing they chose. It also highlights that “theme exposure” does not guarantee smooth compounding. The theme can behave more like a tactical trade than a broad-market allocation during certain phases. For anyone analysing 2024-25 losses, the key is to map the investment date to the index drawdown path.

A quick fact table from the shared snapshots

The following table consolidates key numbers exactly as they appear across the provided context, without reconciling differences between sources.

What to take away from the 2024-25 loss debate

The strongest takeaway from the shared context is that the defence theme delivered outsized gains before mid-2024 and then went through valuation compression. That compression, combined with a large peak-to-trough move in the index, created visible drawdowns soon after new passive products launched. As a result, “since launch” performance can look negative in some time windows, especially if measured near a local low. At the same time, mid-2026 snapshots show positive since-inception or positive one-year numbers, which points to partial recovery after the volatility. Investors comparing returns should check which date is being used, whether the figure is absolute or annualised, and whether it is plan-specific. The context also flags standard disclaimers that losses of original capital may occur, which is particularly relevant for concentrated themes. Finally, the exit load and TER are small but real drags when investors churn positions during swings. In short, the 2024-25 losses discussed online are consistent with an overheated theme undergoing a sharp reset, followed by uneven rebounds.