By BullScreen Editorial Team 
Rising geopolitical tensions between the United States and Iran are creating fresh volatility in global markets, prompting investors to explore sectors that typically benefit during periods of uncertainty. Defence and commodity mutual funds have come into focus as supply disruptions and higher resource prices often support these segments.
Commodity-linked mutual funds have delivered strong returns over the past year. Schemes such as the LIC MF Gold ETF FoF, Quantum Gold Savings Fund, Aditya Birla Sun Life Gold Fund and SBI Gold Fund have posted gains of around 80–85 percent, largely driven by rising gold prices and inflation concerns.
Defence-focused funds have also generated notable returns. The Motilal Oswal Nifty India Defence Index Fund, Aditya Birla Sun Life Nifty India Defence Index Fund, Groww Nifty India Defence ETF FoF and HDFC Defence Fund have delivered roughly 42–48 percent returns over the same period.
Market experts say these sectoral funds tend to move in cycles. Commodity funds usually gain when inflation rises or supply chains are disrupted, while defence funds benefit from higher government spending and rising security concerns.
However, analysts caution that such funds should be considered tactical allocations rather than core holdings. A diversified portfolio anchored by broader equity funds is generally recommended, with limited exposure to defence or commodities depending on an investor’s risk appetite and investment horizon.