Fund managers shift focus to defence ETFs as global tensions mount

InvestorDaily

As geopolitical tensions flare across the globe, the financial industry is capitalising on the surge in defence spending by launching a new wave of exchange-traded funds (ETFs) focused on companies involved in national security, military technology, and defence infrastructure. In recent months, there has been a noticeable pivot in the investment community. While cryptocurrencies once dominated headlines with the launch of various crypto-focused ETFs, the rapidly changing geopolitical landscape has shifted investor interest towards defence ETFs.

This move reflects a broader response to escalating global instability, including ongoing conflicts such as the Russia-Ukraine war, rising tensions in the Middle East, disputes in the South China Sea, and increasing concerns over cyber security threats. A recent report from the Stockholm International Peace Research Institute (SIPRI) indicated that global military spending increased by 7 per cent to US$2.43 trillion in 2023, the largest annual rise since 2009, with projections suggesting it could reach US$3.1 trillion by 2030.

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