SBI BSE India Defence ETF FOF is a new open-ended fund of funds from SBI Mutual Fund. Its NFO opens on 16-11-2026 and closes on 30-11-2026. The scheme document still shows both dates blank.
Nearly all your money goes into SBI BSE India Defence ETF, which holds Indian defence-linked companies. The aim is long-term capital growth by matching that ETF’s returns. Nothing is guaranteed.
The appeal: a defence theme through an ordinary mutual fund folio, with SIPs from ₹500 and no demat account. The catch: one sector, one wrapper.
Also read: Everything you need to know about a new fund offer (NFO)
SBI BSE India Defence ETF FOF NFO details
Particulars | Details |
Fund name | |
Fund type | Open-ended fund of funds |
Category | Fund of Funds Scheme (Domestic) |
Nature of scheme | Passive; invests in SBI BSE India Defence ETF |
Benchmark | BSE India Defence TRI (total return index) |
Fund manager | |
NFO opens | 16-11-2026 (per Morningstar) |
NFO closes | 30-11-2026 (per Morningstar) |
Allotment & reopening date | On or around 07-12-2026 (5 working days after close) |
Minimum investment | ₹5,000 and multiples of ₹1 |
Additional investment | ₹1,000 and multiples of ₹1 |
SIP amount | From ₹500 (12 instalments) or ₹1,000 (6); quarterly ₹1,500 for a year |
NAV | ₹10 per unit |
Stamp duty | 0.005% |
Entry load | NIL |
Exit load | 1% within 15 days of allotment; nil after |
AMC details: SBI Mutual Fund
Particulars | Details |
AMC name | SBI Funds Management Limited (SBI Mutual Fund) |
Assets under management | ₹13.1 lakh crore (quarterly average, 30-09-2026) |
Website | |
Registered office | 9th Floor, Crescenzo, C-38 & 39, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051 |
Contact number | 022 61793537 |
Source: AMFI India New fund offer: SBI BSE India Defence ETF FOF
What has SBI Mutual Fund launched?
This is a fund of funds, or FoF. Instead of shares, it buys units of another fund, here SBI BSE India Defence ETF. That ETF is an exchange traded fund: its units trade on the stock exchange. It holds defence-linked companies and follows the BSE India Defence Index.
At least 95% of your money goes into the ETF. Up to 5% can sit in short government securities, triparty repo (very short secured loans) or liquid fund units, mainly to pay redemptions.
Nobody picks stocks at either level. The FoF matches the ETF, which matches its index, much like an index fund.
Why a wrapper? An ETF needs a demat account and exchange orders. The FoF works like any mutual fund, with SIPs and redemptions at NAV, the net asset value or price of one unit. The ETF is new too: its NFO ran from 13-10-2026 to 19-10-2026.
How does the strategy work?
Step | What happens? |
1. You invest | You buy units at ₹10 in the NFO, or at NAV later, less 0.005% stamp duty. |
2. Money is pooled | The fund aims to invest NFO money within 30 business days of allotment. |
3. ETF units are bought | The FoF buys SBI BSE India Defence ETF units, from the AMC or the exchange. |
4. The ETF follows the index | It holds the index’s stocks in index weights. |
5. Weights reset | Weight caps apply every quarter, and the ETF follows. |
6. A buffer stays liquid | Up to 5% sits in short government securities or liquid funds. |
7. You redeem | Units are sold at NAV, normally paid within 3 working days. |
Let’s understand this fund through an example
This is a made-up illustration, not a return forecast.
Neha, 34, a marketing manager in Ahmedabad, puts ₹50,000 into the NFO. After 0.005% stamp duty (₹2.50), she gets 4,999.75 units at ₹10.
The FoF buys ETF units with her money. On the index’s 31-07-2026 weights, about ₹16 of every ₹100 sits in Hindustan Aeronautics, ₹14 in Bharat Electronics and ₹13 in Solar Industries. Thirty other companies share the rest.
Her NAV moves with the whole basket, not one company.
Portfolio allocation of this NFO
Instrument | Indicative allocation (% of net assets) |
Units of SBI BSE India Defence ETF | 95% to 100% |
Government securities (up to 1 year), T-bills, triparty repo, liquid funds | 0% to 5% |
No derivatives, foreign securities or short selling are allowed. In effect, you own one theme.
Investment strategy, costs and liquidity
The index, built by BSE Index Services, covers core defence companies plus defence product makers from the BSE 1000. Core names are capped at 15% each and 75% together; the rest at 5% each and 25% together.
Success means the NAV follows the ETF closely. The gap is called tracking error, and two layers give it more room. SEBI caps tracking error for index schemes at 2% a year.
Costs come in two layers. The FoF and ETF together can charge a base expense of up to 0.90% a year, with the FoF’s own share capped at twice the ETF’s.
The ETF’s total expense ratio, its yearly running cost, was 0.35% on 30-10-2026. The Direct plan, with no distributor commission, costs less.
You can redeem on any business day at NAV. ETF units are valued at exchange prices, which can differ slightly from the ETF’s NAV. In a market crisis, the trustee can limit redemptions above ₹2 lakh.
Potential benefits of this NFO
Potential benefit | Why does it matter? |
Defence theme in one fund | 33 companies on 31-07-2026, across aerospace, shipbuilding, electronics and vehicles. |
No demat needed | You buy and redeem with the AMC at NAV. |
Rules, not opinions | The index follows published rules, not a manager’s views. |
Weight caps | No core stock can exceed 15%, or any other stock 5%, at a reset. |
Key risks to know before you invest
Risk | What does it mean? |
Market and sector risk | The ETF holds shares and follows the market. The fund takes no defensive positions. |
Concentration risk | About 42% sat in three stocks on 31-07-2026. |
Double expense | You bear the FoF’s and the ETF’s costs, so returns can trail the index. |
Tracking gap | Costs, cash and timing can make returns differ from the index. |
Price variance | ETF units are valued at exchange prices, which can differ from the ETF’s NAV. |
Liquidity risk | Thin ETF trading can slow redemptions, and large ones can be limited. |
Who may consider this fund?
Investor type | Why it may fit |
Investors with a diversified core (our reading) | A small defence slice can sit beside broad equity funds. |
SIP investors without a demat account | SIPs from ₹500, handled by the AMC at NAV. |
Investors with an investment horizon of five years or more (our reading) | The SID lists long-term growth as the aim, and one sector can swing hard. |
NRIs and Persons of Indian Origin | They can invest with approvals, except US or Canadian residents. |
Who may not find it suitable?
Investor type | Why it may not fit |
Money needed within three years | One sector can fall for long, and a 1% load applies within 15 days. |
First-time investors with no core portfolio (our reading) | A single theme is a side holding, not a starting point. |
Cost-focused investors with a demat account | The ETF itself avoids the second cost layer. |
Anyone already heavy in defence or PSU stocks | You may hold the same companies twice. |
US persons and Canadian residents | The SID bars them. |
How does it compare with traditional investment options?
Feature | Fixed deposit | Debt fund | Hybrid fund | Equity fund | This new fund |
Risk | Low | Low to moderate | Moderate | High | High, one sector |
Return potential | Fixed | Moderate | Moderate to high | High | Tied to index |
Volatility | Very low | Low to moderate | Moderate | High | High |
Liquidity | Penalty if broken | Business days | Business days | Business days | Business days; 1% load within 15 days |
Horizon | Fixed tenure | 1 to 3 years | 3 to 5 years | 5 years or more | 5 years or more |
Suitable investor | Certainty seekers | Stability seekers | Balanced investors | Growth seekers | Small sector slice |
NFO review by Zenith Finserve
This NFO is a convenience product. The defence idea lives in the ETF underneath. The FoF adds a mutual fund wrapper, with SIPs and no demat account, plus a second layer of cost.
In our view, it fits as a small satellite holding for someone with a five-year or longer view, beside a diversified core. About 42% sits in three companies, so a weak year for them will show. It does not suit money needed within three years.
Before applying, compare the combined cost with the ETF if you have a demat account, and check your existing defence and PSU exposure. This is our interpretation, not a recommendation. Review your asset allocation first.
How Zenith Finserve can help
At Zenith Finserve, we follow a process driven investment framework. We assess your goals, cash flows, risk profile, time horizon, existing investments, loans and tax situation before suggesting investments.
We align our investment suggestions with your financial objectives and review them periodically to keep them suitable as your circumstances change.
Explore our mutual fund advisory services.
Similar NFOs on Zenith and how does this fund compare?
Open NFOs we have covered:
Invesco India Nifty Metal Index Fund NFO: another single-sector index fund, opening 16-11-2026, on metals.
JioBlackRock Advantage World Equity Fund NFO: also a fund of funds, but holding an overseas equity fund. We have not covered another open defence NFO yet.
Existing defence options:
Fund | Mandate | Costs | Liquidity | Key risk | Track record |
This NFO | FoF; 95% to 100% in SBI BSE India Defence ETF | FoF plus ETF base expense capped at 0.90% | NAV; 1% load within 15 days | Concentration; two cost layers | Not available (new) |
ETF on the same index; NFO 13-10-2026 to 19-10-2026 | 0.35% (30-10-2026) | Exchange traded; demat needed | Concentration; trading spread | Not available (October 2026 launch) | |
FoF on Mirae’s ETF, same index; launched 24-02-2026 | Direct 0.19% (30-09-2026) plus ETF base expense 0.29% | Concentration; two cost layers | Under one year; AUM ₹130.19 crore (11-11-2026) | ||
Index fund on the Nifty India Defence Index; launched 03-07-2024 | Direct 0.50% | NAV; 1% within 15 days | Concentration; tracking gap | Direct growth, 30-09-2026: 18.13% (1 year), 9.09% a year since launch |
Why these: the ETF is this fund’s own underlying. Mirae’s FoF is the closest same-structure fund on the same index.
Motilal Oswal’s is the longest running defence fund without an ETF layer. Past performance may or may not be sustained in future.
Also read: Should you invest in a new fund offer (NFO)?
Is SBI BSE India Defence ETF FOF NFO good to invest in?
That depends on your goals more than the fund. It suits investors who already hold a diversified core and want a small defence tilt for five years or more. It is a poor fit for short-term money or as your only equity fund. Zenith Finserve does not recommend any fund, so compare it with your existing mix first.
What does SBI BSE India Defence ETF FOF invest in?
It puts 95% to 100% of its assets into units of SBI BSE India Defence ETF, which follows the BSE India Defence Index.
Up to 5% can go into short government securities, triparty repo or liquid fund units. On 31-07-2026 the index held 33 companies, led by Hindustan Aeronautics, Bharat Electronics and Solar Industries.
What are the SBI BSE India Defence ETF FOF NFO dates?
NFO opens on 16-11-2026 and closing on 30-11-2026.
An NFO cannot run longer than 15 calendar days. Allotment is expected on or around 07-12-2026, and the fund then reopens within 5 business days.
What is the minimum investment in SBI BSE India Defence ETF FOF?
The minimum lump sum is ₹5,000, in multiples of ₹1, in the NFO and later. Additional purchases start at ₹1,000.
Daily, weekly and monthly SIPs start at ₹500 for 12 instalments, and weekly and monthly SIPs can also start at ₹1,000 for 6. The NFO must raise at least ₹10 crore, or investors are refunded.
What is the exit load on SBI BSE India Defence ETF FOF?
A 1% exit load applies if you exit within 15 days of allotment. After 15 days, nothing is deducted.
There is no entry load, but 0.005% stamp duty reduces the units you receive on each purchase, including SIP instalments.
What is the expense ratio of SBI BSE India Defence ETF FOF?
The SID caps the combined base expense of the FoF and the ETF at 0.90% a year of daily net assets, and limits the FoF’s own share to twice the ETF’s.
The ETF’s total expense ratio was 0.35% on 30-10-2026. Brokerage, transaction costs and GST come on top. The Direct plan costs less. Actual figures appear on SBI Mutual Fund’s site once the fund starts.
Should I choose SBI BSE India Defence ETF FOF or SBI BSE India Defence ETF?
Both follow the same index. The ETF has one layer of cost, but you need a demat account and trade on the exchange, where the price can differ slightly from NAV.
The FoF adds its own cost but works like a regular mutual fund, with SIPs and redemptions at NAV. If you already trade ETFs, the ETF is the cheaper route.
How are gains from SBI BSE India Defence ETF FOF taxed?
As per the SID’s tax table, gains on units held up to 12 months are short term and taxed at 20%.
Gains after 12 months are long-term capital gains, taxed at 12.5% on gains above ₹1.25 lakh a year, plus surcharge and cess. Tax rules change, so confirm your case with a tax adviser.
Who manages SBI BSE India Defence ETF FOF?
The SID names Viral Chhadva. He is a CFA charterholder with a master’s in financial management from JBIMS, and joined SBI Funds Management in December 2020.
He has over 17 years in financial services, mostly in trade execution at IIFL Securities and ICICI Securities, and runs several SBI index funds and ETFs. His tenure on this new scheme is not available.
What stocks are in the BSE India Defence Index?
On 31-07-2026 it held 33 companies. The three largest were Hindustan Aeronautics (15.70%), Bharat Electronics (13.62%) and Solar Industries (12.92%).
Others include Adani Enterprises, Mahindra & Mahindra, Mazagon Dock, Larsen & Toubro and Bharat Forge. Some of these do much more than defence work, so the index is not purely defence.
Can NRIs invest in SBI BSE India Defence ETF FOF?
Yes. NRIs and Persons of Indian Origin can invest if they hold the required approvals, except residents of the United States or Canada, whom the SID bars.
Other foreign nationals cannot invest. Check the SID’s eligibility section and your bank’s NRI process before applying.
SBI BSE India Defence ETF FOF review: what is Zenith Finserve's view?
We see it as a convenient way to hold a defence theme, best used as a small satellite position.
The idea comes from the ETF underneath, so the FoF mainly adds a mutual fund wrapper and a second layer of cost.
About 42% sits in three companies. Check your existing exposure and time horizon before deciding.
