Frustrated with Defence Fund Underperformance? Three Mutual Funds Deliver Double-Digit Returns in Just One Month; Check Out!

Three Mutual Funds Deliver Double-Digit Returns in Just One Month, Outperform Defence Funds

The opportunity cost of capital in investing refers to the potential return an investor forfeits by choosing one investment option over another. This concept is crucial in financial decision-making, as it helps investors assess whether a particular investment is truly worth pursuing.

Not long ago, defence stocks and mutual funds related to the defence sector were the center of attention, delivering astronomical returns over the past couple of years. These stocks became multibaggers, but sector rotation has played a pivotal role in this bull market, with the baton passing from one sector to another.

Recently, the Nifty Pharma index reached an all-time high, up by 34 per cent year-to-date. Its performance in 2024 has been outstanding, and in August alone, the index rose over 3.5 per cent. Investors in mutual funds related to the pharma sector would have outperformed the market, generating significant alpha returns.

Here are the top three performing sectoral pharma mutual funds, sorted by returns:

These funds have significantly outperformed defense-related schemes, which were once the market's darling. For instance, the Motilal Oswal Nifty India Defence Index Fund, launched on July 3, 2024, with an AUM of over Rs 2,300 crore, has declined by 5.2 per cent in the last month, with its NAV falling below Rs 9.50. Another well-known defence scheme - HDFC Defence Fund Direct Plan , which had doubled investors' money since its inception in June 2023 with absolute returns of 126.14 per cent, is down by 1.05 per cent in the last month.

This shift underscores the importance of sector rotation and the opportunity cost of capital in making informed investment decisions.

Disclaimer: The article is for informational purposes only and not investment advice.