Looking for the best defence ETFs to invest in? With global uncertainty, plenty of people are investing in defence ETFs holding stocks that support national and international security.
Investing in defence exchange-traded funds (ETFs) offers a streamlined way to gain exposure to the global military and aerospace sector, without having to pick individual defence stocks. These funds bundle together leading companies involved in national security, defence technology, and military contracting, providing diversified access to an industry known for its resilience and long-term growth potential.
As governments around the world continue to raise budgets and prioritize defence spending, the sector can remain stable even during economic uncertainty. In this guide, we’ll explore some of the top defence ETFs, what drives their performance, the key risks to consider, and how to buy defence ETFs as part of a well-balanced investment portfolio.
Popular defence ETFs for 2025
Unfortunately it’s impossible to predict what will be the best defence ETFs to invest in during any given year. But, there’s not actually that many defence ETFs available to UK investors, so to give you some starting inspiration, here are some popular options:
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
How to invest in defence ETFs
Here’s a brief step-by-step guide explaining how to start investing in defence ETFs:
Open an investing account. The first step in finding the best trading app or platform that suits your needs.
Fund your account. Once your share trading account is set up, you can deposit money. Usually this can be done via a bank transfer, debit card, or any other means allowed by your trading platform.
Research and choose defence stock ETFs. Research your ETFs, and then search them up on your chosen platform.
Place your order. Once you’ve found the ETFs you want, select how much you want to invest or the number of shares, and create an order to buy shares. And just like that, you’re now officially an investor in defence stocks.
We analysed all popular share dealing platforms in the UK using 35 data points and combined this with our expert insight from using the apps. The platforms we've selected as best for each category offer stand-out features or a unique combination of elements for a specific aspect of investing. If we show a "Promoted for" pick, it's been chosen from among our partners and is based on factors that include special features or offers, and the commission we receive. Keep in mind that our picks may not always be the best for you – it's important to compare for yourself. More details in our full methodology.
Explore defence ETFs in more detail
If you're interested in investing in this industry, take a closer look at what companies in this industry do and how the stocks have historically performed. Keep in mind that positive past performance doesn't guarantee that a stock will continue to rise in the future.
Global X Defense Tech ETF (SHLD)
The fund invests at least 80% of its net assets, plus borrowings for investment purposes (if any), in the securities of the Global X Defense Tech Index, which may include common stocks, American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the securities in the underlying index. The underlying index is owned and was developed by Global X Management Company LLC, an affiliate of the fund and the fund's investment adviser.
Global X Defense Tech ETF is listed on the NYSE ARCA.
HANetf ICAV Future of Defence UCITS ETF Accumulating (NATO)
This ETF aims to provide exposure to the evolving landscape of modern defence and national security, including cybersecurity, aerospace, and advanced military technology. It tracks and invests in companies generating revenue from NATO and NATO+ ally defence and cyber defence spending. So, it’s aligned with NATO’s strategic priorities and invests in firms contributing to global defence innovation like Palantir, Rheinmetall and BAE Systems.
HANetf ICAV Future of Defence UCITS ETF Accumulating is listed on the London Stock Exchange (LSE).
The Invesco Defence Innovation ETF is a passively managed fund that mimics the performance of the S&P Kensho Global Future Defense Index. It focuses on next-generation defence technologies, including autonomous systems, AI, robotics, and space-based applications. It targets companies expected to shape the future of military and security operations, blending traditional defence contractors with emerging tech players. This thematic approach offers investors exposure to the intersection of defence and innovation on a global scale, while keeping costs low with the passive approach.
Invesco Markets plc Invesco Defence Innovation UCITS ETF is listed on the XETRA.
iShares Global Aerospace-and-Defence UCITS ETF USD Acc (DFND)
This ETF provides broad exposure to the global aerospace and defence sector, using the S&P Developed BMI Select Aerospace & Defence 35/20 Capped Index as its benchmark. It invests in large-cap companies engaged in aircraft production, military systems, and defence contracting. Top holdings include names like Lockheed Martin, Boeing, and Rolls-Royce. It offers a diversified basket of leading players in the defence industry. The accumulating structure makes it appealing for investors seeking capital appreciation without dividend payouts.
iShares Global Aerospace-and-Defence UCITS ETF USD Acc is listed on the AS.
The VanEck Defense ETF focuses on companies that derive their revenue from defence-related activities, such as weapons systems, military logistics, and national security technologies. The underlying index used as a benchmark is the MarketVector Global Defense Industry Index. It aims to hold at least 25 defence stocks, screens for controversial weapons, and is designed for investors looking to benefit from rising global military spending. Examples of top holdings in the ETF include Thales, Leonardo and SAAB.
VanEck Defense ETF A USD Acc GBP is listed on the London Stock Exchange (LSE).
While defence ETFs can offer diversification and exposure to a historically resilient sector, they also come with specific risks investors should be aware of:
Geopolitical volatility. While global tensions can sometimes drive defence spending, sudden shifts (like ceasefires or regime changes) can lead to sharp drops in demand for military equipment and services.
Government spending cuts. Defence budgets are controlled by governments and can be reduced due to political changes, NATO directives, economic pressures, or shifting national priorities, directly impacting the companies held in these ETFs.
Ethical and ESG concerns. Defence companies may be excluded from some ESG (Environmental, Social, and Governance) portfolios due to their involvement in weapons manufacturing, which can affect investor sentiment and fund inflows.
Concentration risk. Some defence ETFs are heavily weighted toward a few large companies or specific regions like the US, which can reduce the benefits of diversification.
Currency risk. For investors buying ETFs with international holdings, fluctuations in foreign exchange rates can impact returns, especially if the fund is not currency-hedged.
Market risk. The underlying stocks in a defence ETF are subject to broader market movements, which can affect performance regardless of sector-specific trends.
Bottom line
Investing in defence ETFs can offer a unique blend of long-term stability and global exposure, driven by sustained government spending and the strategic importance of the defence sector. With UK-based companies like BAE Systems and Rolls-Royce often included in major ETFs, investors still benefit from the strength of domestic firms while also gaining access to a broader mix of international defence stocks.
Defence ETFs can help mitigate the risks of holding individual stocks by offering built-in diversification across multiple companies and regions. That said, you don’t get to control what’s in the ETF and performance can still be influenced by shifting government budgets, geopolitical tensions, and changes in defence policies. Staying informed and reviewing your portfolio regularly will help ensure your investment in defence ETFs remains aligned with your goals and the evolving global landscape.
Frequently asked questions
Yes, UK investors can access a wide range of US and global defence ETFs through most online brokers or investment platforms. Popular options include ETFs listed on European exchanges that are UCITS- compliant.
Always check for currency exposure, trading fees, and whether your platform offers access to international markets.
Defence ETFs can be a solid long-term investment option, especially for those seeking exposure to a sector supported by ongoing government spending and global security needs.
However, it’s not a bulletproof sector and defence stocks may be more cyclical than other sectors with heightened sensitivity to geopolitical events.
Including them as a small, diversified part of a broader portfolio may offer stability during downturns but should be balanced with other sectors.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers.
He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active.
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