BRUSSELS, Jan 20 (Reuters) - The demand for a leading defense sector exchange-traded fund (ETF) is on the rise ahead of the incumbent administration's return to the White House, according to investment company and ETF issuer VanEck.
The European branch of the New York-based company introduced the VanEck Defense UCITS ETF in March 2023. It posted a 55% increase in 2024 and has already shown an 8% rise at the beginning of 2025, managing assets of approximately $1.8 billion.
"We are witnessing a strong surge in the defense sector. Since the launch of our fund, we have seen consistent inflows, with ongoing global geopolitical tensions serving as the primary driver of interest," noted VanEck EU CEO Martijn Rozemuller.
Earlier this month, it was suggested that countries should increase their defense spending to 5% of their gross domestic product, a substantial escalation from the current 2% target. There are expectations that NATO will surpass its current defense spending objective.
"As the political landscape evolves, so does investor sentiment towards defense stocks. Just a few years ago, the sector was off-limits for most institutional investors. Today, with supportive government policies, the contrast is stark," Rozemuller added.
The top holdings of the ETF include Palantir Technologies, Thales, Booz Allen Hamilton, and Leonardo.