The new year is still in its infancy. However, as the U.S. incursion against Venezuela confirms, geopolitical events are already front-and-center. Investors now might ponder the fates of aerospace and defense stocks, as that asset class had an impressive 2025 showing.
Increased defense spending, particularly by countries outside of the U.S., China and Russia, loomed large in 2025. Those three countries count as the world’s most profligate defense spenders. The theme is widely expected to be prominent again this year, indicating investors may want to evaluate ETFs such as the WisdomTree Global Defense Fund (WDGF).
One of three defense ETFs in the WisdomTree suite, the fund lives up to its global billing. WDGF, which tracks the WisdomTree Global Defense Index, allocates 54.51% of its weight to domestic defense stocks. While that sounds hefty, it features exposure to stocks from 15 other countries. That signals that the ETF links to the expansion of global defense spending.
WDGF: At the Right Place at the Right Time
For WDGF, which debuted last September, signs point to this ETF being an ideal industry play for 2026. A slew of countries around the world are boosting defense expenditures.
“Across Europe, the Middle East, East Asia, the Americas and the Arctic, political decisions are translating directly into defense budgets and procurement pipelines,” noted deVere Group CEO Nigel Green. “Defense stocks are moving into a year where geopolitical reality is shaping fiscal policy in real time.”
Perhaps adding to the allure of WDGF this year, Green noted that the catalysts moving defense spending to the upside are structural, not cyclical. That suggests that more countries, particularly in Asia and Europe, are choosing not to skimp on defense spending. Rather, it may become a yearly priority.
Government Budgets Favor Security
In what sounds like good news for WDGF investors, the above sentiment implies that new defense spending should be a durable theme over the long-term. Add to that, it’s not a budget item global politicians are looking to cut.
“Security spending has become one of the most protected areas of government budgets. While other departments face political trade-offs, defense lines are being expanded because leaders understand that military readiness underpins economic stability,” added Green.
WDGF holds 88 stocks at weights ranging from 0.03% to 5.20%, as of January 7. The ETF’s annual expense ratio is 0.45%.
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