The global geopolitical context is fueling a new trend in financial markets: the investment funds dedicated to the defense sector. Only in Germany, according to the Scope Fund Analysis data, the segment reached 13.3 billion euros under management, with 20 products available, most of which only recently launched.
The increase in interest by investors reflects the impact of tensions related to conflicts in Ukraine, Middle East and North Africa. The asset managers responded promptly to this question, proposing both global and regional strategies, with particular attention to Europe and the Indo-Pacific area. The rapid diffusion of thematic ETFs, supported by a more contained number of active funds, testifies to how the defense is no longer a marginal sector, but an investment area now consolidated.
The data of the military sector
To strengthen this dynamic there is the evolution of data on the military sector. According to the Stockholm International Peace Research Institute (Sipri), the global military spending reached the record of 2.72 trillion dollars in 2024, an increase of 9.4% compared to the previous year: the most marked rise from the end of the Cold War. Andreas Bartels, Senior Director of Scope, underlined how this scenario also finds reflected in financial markets, where the thematic funds on safety and defense are transforming from niche products to recurring tools in both institutional and private portfolios. Although many strategies are not exclusively dedicated to armaments, Scope’s analysis highlights a clear and measurable growth, with 13.3 billion euros raised by funds with direct focus on the sector.
Offer in rapid expansion
On the offer level, the market has known a rapid expansion starting from March 2023, when the first defense fund was launched. By February 2025, the global orientation tools were already eight, with Vaneck and Hanetf to drive the segment thanks to 5.8 billion and 2.4 billion assets respectively.
Titles such as Bae Systems, Leonardo, Rheinmetall, Rolls-Royce, Saab and Thales prevail among the wallet choices, present in the top ten of over half of the funds analyzed. Other groups, such as Airbus, Boeing, Palantir and Rtx, appear more selectively but still represent a significant part of the exhibitions. The strategic variety is wide: some solutions focus solely on defense titles, while others integrate adjacent sectors such as cybersicacy, aerospace and safety infrastructures.
Returns
From the point of view of returns, the defense funds have already recorded significant performance in a very short time horizon. As of September 2, 2025, three products – Vaneck Defence Ucits Etf, Hanetf Future of Defense Etf and Ishares Global Aerospace & DefeNCE ETF – have scored annual earnings of 62.5%respectively, 49.2%and 35.1%, clearly overcoming the MSCI World (+8.5%).
Although they miss multi -year track record, these data confirm the appeal of the sector, which is consolidating itself as a asset class in its own right. However, as Bartels observes, investors must carefully weigh not only the performance potential, but also the risks related to a sector strongly influenced by geopolitical dynamics, in addition to the ethical implications of investment in the military. The trend appears now irreversible, with growth prospects supported by the international context and by a range of constantly evolving products.
