As tensions rise across the globe, from the conflict in Ukraine to the missile strikes in the Middle East, investors are seeking innovative ways to protect their portfolios against geopolitical risk. Enter defence ETFs, a game-changing asset allocation tool that offers a unique opportunity to capitalize on the uptick in military and cybersecurity spending.
With governments ramping up their defence budgets and a surge in demand for arms and cybersecurity services, three asset managers have introduced defence ETFs in Europe over the past year. These ETFs provide investors with exposure to companies involved in the defence industry, offering stability and potential growth in an increasingly uncertain world.
Experts suggest that defence ETFs can serve as a defensive equity play for investors, providing a hedge against geopolitical turmoil and capitalizing on the stable cash flow patterns of defence-related businesses. The sectoral concentration and controversial weapons screens of these ETFs add an extra layer of protection for investors looking to navigate volatile markets.
With strong demand and impressive performance, defence ETFs are proving to be a valuable tool in fund selectors’ arsenals. As geopolitical risks continue to evolve, these ETFs offer investors a way to stay ahead of the game and strategically position their portfolios for success in an ever-changing world.
