One of this year’s most noticeable industry-level themes has been increased defense and national security spending. Importantly, that trend is expanding beyond the usual suspects of the U.S., China, and Russia. Europe is getting in on the act in a big way. That’s ushering focus onto ETFs such as the WisdomTree Europe Defense Fund (WDEF ).
The fund debuted in July and follows the WisdomTree Europe Defense Index. It may be a prime example of age being nothing but a number. That’s because investors’ reluctance to embrace new ETFs could prove costly when it comes WDEF. That’s because European defense spending is surging. And it’s expected to continue doing so through the start of the next decade.
European nations that are also NATO members are under significant pressure from the White House to pick up more of their defense tabs. It doesn’t take much prodding to get those countries to do just so. That’s because the Russia/Ukraine conflict is close to entering its fourth year. Those are among the reasons some experts see paths to long-term upside for European defense companies, including those held by WDEF.
WDEF Addresses a Big Market
Europe’s years as a defense spending laggard belies that the region offers a massive total addressable market regarding national security expenditures.
“The total addressable market for European investors should grow 29% per year until 2030, according to the European Defence Agency,” noted BNP Paribas. “Its study uses a hypothesis of 3% of GDP spending on defence by 2030 (versus the 3.5% agreed by NATO members and 2% previously), taking progressively into account the 65% target of components from European companies, adjusting slightly higher also the proportion of spending on equipment versus staff.”
The French bank also said that European defense stocks have surged in 2025. But the sector is attractive on valuation while offering superior growth prospects compared to other European equity sectors.
Additionally, there are policy-level catalysts in place that could drive WDEF member firms higher over extended periods. Said another way, some governments in the region are making clear they’re committed to elevated defense expenditures.
Aiming to Strengthen EU's Strategic Resilience & Autonomy
“On an even longer-term note, the Multiannual Financial Framework proposed by the European Commission in July 2025, covering 2028–2034, provides for a budget of €2trn aimed at strengthening the EU’s strategic autonomy and resilience. This is equivalent to 1.26% of EU GDP over the seven-year period, doubling the €1trn of the previous 2021-2027 budget,” concluded BNP Paribas.
This article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional.
WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.
For more news, information, and analysis, visit the Modern Alpha Content Hub.
