New defence ETFs hit the Aussie market
Betashares and Global X have launched two respective exchange-traded funds (ETFs) focused on the defence and security sectors.
Betashares announced the launch of its Global Defence ETF (ASX: ARMR) on 8 September, which offers Australian investors with exposure to the global defence and security industry.
The fund will invest in a portfolio of up to 60 global defence companies headquartered in NATO member and major NATO ally countries such as Australia, Japan and South Korea. These firms will derive over 50 per cent of their revenues from the development and manufacturing of defence equipment and technology.
The initial portfolio will consist of companies including Lockheed Martin, BAE Systems, General Dynamics and Palantir Technologies, with a management fee of 0.55 per cent per annum.
According to Betashares, the ETF’s launch comes alongside the significant rise in global spending amid the growing complexity of modern threats and technological advancements. The fund allows financial advisers and investors to gain focused exposure to the defence sector, diversifying their portfolio of equities, bonds and other assets.
Betashares chief executive Alex Vynokur said: “Due to the shifting geopolitical landscape, NATO aligned nations are increasing spending to levels not seen since the Cold War to enhance their defences. This underpins strong projected growth in revenue and cash flows for many companies in the ARMR portfolio.
“Moreover, additional spending on defence has historically been supportive of innovative technological developments with commercial applications.”
A day later, Global X also announced the launch of its own Global X Defence Tech ETF (ASX: DTEC) on 9 September. This fund provides Australian investors with access to global companies at the forefront of defence innovation and national safety, the ETF provider confirmed.
It offers targeted exposure to key sectors driving the future of defence, such as artificial intelligence (AI), drones and cyber security. With a management fee of 0.50 per cent per annum, the fund was previously available in the US under a different ticker code and has gathered over US$500 million in net assets since it was listed less than a year ago.
Global X investment strategist Billy Leung said the ETF’s launch comes as geopolitical uncertainty heightens national security concerns and sparks greater defence spending.
He explained: “As the global landscape evolves, modern defence planning has shifted towards safeguarding nations through a combination of technology-driven innovations and essential defence infrastructure to enhance protection, intelligence and security.
“DTEC offers growth due to its differentiated exposure across various sectors, including industrials, cyber security, AI and augmented reality. What is key here is that unlike many civilian markets, defence revenues are closely tied to military needs. This gives the defence sector a level of resilience and less correlation with general economic cycles, positioning DTEC as an attractive option for investors seeking capital growth.”
The two ETFs follow VanEck’s own announcement last month, which confirmed it would be launching the VanEck Global Defence ETF on the ASX with a focus on global defence stocks. The provider said it offers investors an opportunity to invest in stocks which are typically unavailable to retail investors.
AUTHOR
Jasmine Siljic
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