Supported in part by a growing U.S. defense budget, legacy aerospace and defense ETFs are performing admirably. A trio of those funds each have more than doubled over the past three years. That’s great for investors engaged with those products. However, a new era of defense spending and product evolution is here. It’s an appropriate time for savvy investors to consider next-generation approaches to defense investing. The WisdomTree Global Defense Fund (WDGF) is an example of an ETF that answers that bell.
WDGF debuted last September as one of three defense ETFs in WisdomTree’s roster of funds offering refreshed approaches to this industry. Living up to its global billing, WDGF follows the WisdomTree Global Defense Index. That index includes domestic equities as well as Asian and European fare, confirming investors are getting a global approach to an industry that merits it. The index’s use of regional and revenue metrics bolsters that point. That ensures credible defense names and truly global exposure.
It’s Time to Think Differently About Defense Investing
When it comes to global defense expenditures, the “three kings” are the U.S., China and the Russia. However, from the defense spending perspective, the latter two are largely uninvestable to market participants in this country. That leaves investors to choose from stocks and ETFs that are heavily dependent on the U.S. government.
As noted above, the returns suggest that approach has worked in recent years. Still, it misses out on new, potentially compelling opportunities. WDGF fills that void.
“In Europe, where large-cap technology ecosystems are limited, defense companies are often at the forefront of advanced engineering and R&D. In Asia, particularly Japan and South Korea, electronic components and precision interception technologies are global leaders,” according to WisdomTree research.
WDGF is further relevant now because of the evolution of how governments defend their nations. Yes, aircraft carriers, fighter jets, submarines, tanks and the like still matter. Defense increasingly roots in technology, though. Many of the old guard ETFs in the category don’t have adequate exposure to that theme.
WDGF and its WisdomTree stablemates “focus on firms positioned to benefit from modernization, technological advancement and expanding global defense budgets. Sector exposure skews toward industrials, but with meaningful embedded technology components,” added the issuer.
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.
