Global Defense ETFs: Mapping the Opportunity

One of the most persistent themes this year has been global defense. Historically, it has been an industry that tends to shine when geopolitics drives the macro narrative. But 2025 has shown that even in the absence of a single headline “shock,” investors subtly grew interest in global defense. Funds like the Select STOXX Europe Aerospace & Defense ETF (EUAD ) and Global X Defense Tech ETF (SHLD ) have sat near the top of the U.S.-listed non-leveraged ETF performance tables for most of the year. Now ETF issuers have rushed in with more targeted tools, launching six more global/international defense ETFs in 2025.

Why defense? (More details here.) Defense companies offer exposure to rising security and defense budgets during ongoing geopolitical tensions. For investors, that can translate into resilient cash flows, long-term contracts, and a potential hedge against geopolitical shocks in a broader equity portfolio.

Why international/global defense? (More details here.) U.S. defense has already had a strong multi-year run. Traditional broad ETFs like ITA now sit on double-digit YTD gains and several billion dollars of inflows. The more interesting story in 2025 has been how quickly non-U.S. budgets are catching up. Spending growth across Europe and Asia has grown as allies modernize and expand their militaries. That diversification can reduce single-country risk while increasing exposure to fast-growing defense budgets and differentiated regional players.

Performance and flows of several existing ETFs have carried the rising momentum of defense.

In Europe, HANetf’s Future of Defence UCITS ETF (NATO LN) accumulated over $2.8 billion in assets since its launch in July 2023.

In the U.S., SHLD has seen some significant attention since its launch in September 2023. This ETF has returned 62% YTD. And even more impressively, the ETF has the highest net inflows out of its peer group, at $3.4 billion YTD. That’s even higher than the $3.2 billion seen by the largest player, iShares U.S. Aerospace & Defense ETF (ITA B+).

Launched in October 2024, EUAD quickly became one of the top-performing non-leveraged ETFs in the U.S. ETF universe. Year-to-date, it is up around 64% due to concentrated exposure to European names like Rheinmetall (RNMBY), BAE Systems (BAESY), and Saab (SAABY). Assets have grown to roughly $1 billion in only around a year.

After the success of SHLD and EUAD, it’s not a surprise that many issuers decided to launch global defense funds. Some of these have carved very specific niches in the Asian and European markets. Below is a brief description of these funds (listed in order of launch date).

• The PLUS Korea Defense Industry Index ETF (KDEF ) is arguably the most unique of the group, given that it focuses on a single country. In contrast, broad Korea ETFs like the iShares MSCI South Korea ETF (EWY B) are heavy in technology (EWY consists of 40% semiconductors with less than 3% in aerospace & defense). From a thematic perspective, KDEF’s value is targeting under-represented defense names with significant growth potential, rather than depending on the typically prevalent tech story. Since its launch in February 2025, the fund is up 86%.
• The iShares Defense Industrials Active ETF (IDEF ) is an active play on the industry which focuses on companies positioned to benefit from increased global defense and security spending. In practice, active sector ETFs are often useful if you want access to a broader view and/or shifts in a theme that is not limited to a specific sector or industry. Note that aerospace & defense is traditionally an industry that’s part of the broader industrials sector, so holdings tend to be very specific in an indexed fund. According to the iShares website, IDEF uses proprietary AI-powered models, alternative datasets like defense revenue exposure, and qualitative insights from BlackRock’s specialists.
• The WisdomTree Europe Defense Fund (WDEF ). WisdomTree recently released a suite of three global defense ETFs. WDEF, which aims to capture the “structural multi-year re-armament cycle in Europe” is the largest with $27 million in assets. Its holdings must generate at least 10% of their revenue from defense-related activities (although it uses an exposure score to derive weight from those holdings with greater percentages). Relative to EUAD, WDEF holds a wider breadth of stocks and is less concentrated, although top names are similar. From a geographic perspective, the fund is allocated to 31% UK, 28% France, and 16% Germany.
• The WisdomTree Asia Defense Fund (WDAF) is broader than KDEF and targets Asian defense in countries like India (currently 43% of weight), South Korea (36% of weight), and Japan (9% of weight). Note that China is not included. Exposure to Asian defense can complement U.S. and European exposure, especially given Asia’s tech innovation in cybersecurity and other defense technology.
• The WisdomTree Global Defense Fund (WDGF) is the broadest of the WisdomTree defense group and includes exposures to the U.S., Europe, and Asia. Over 50% of the fund’s weight is in the U.S. However, it provides the opportunity to tilt toward regions with accelerating defense investment. It can serve as a core defense holding.
• The Tema International Defense Innovation ETF (GDFN) is also an actively managed fund which focuses on defense innovation, including companies that build and manage cybersecurity systems, use AI and big data, and build advanced military systems, robotics, etc. for defense applications.

Demand for defense investments, particularly in the growing global/international market, has allowed ETF issuers to carve out several niche areas into new opportunities for investors in 2025.

I will be moderating a virtual panel with WisdomTree and Pictet called “Going Global: Investing Abroad” in VettaFi’s 2026 Market Outlook Symposium on December 9, 2025. The Symposium kickoff will be at 11 a.m. ET. For agenda, speakers, and registration, see this link here.

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