Fighter armor Leopard 2 in a maneuver (photo: Freepik, Arnascemerka)
The increasing defense spending in Europe makes the coffers of the armaments industry ring. With the new Wisdomtree Europe Defense UCITS ETF, investors can benefit in a targeted manner. But is it worth getting started?
Armor’s boom: Germany loosens the debt brake
The Russian attack war against Ukraine shaken Europe. Germany’s “whatever-it-tiles” policy and the relaxation of the debt brake should increase the defense spending from the current 1.5 percent to up to 4 percent of gross domestic product (GDP). That is an additional 180 billion euros annually, which are particularly beneficial for European armaments companies.
The United States also wobbles as the previous protective power in Europe. The result: Many European countries massively open their defense budgets. As part of the “Rearm Europe” EU plan, almost 800 billion euros are to be mobilized for a safe and resilient Europe in the next few years. National initiatives as in Germany ensure a significant increase in military spending.
The ETF for Europe’s upgrade: Wisdomtree Europe Defense Ucits ETF
On March 4, 2025, the Wisdomtree Europe Defense Ucits ETF (ISIN: IE0002Y8CX98). It offers investors the opportunity to invest in European armaments companies that benefit from the upgrade boom. The ETF covers the entire value chain of the defense industry – from air defense and cyber security to marine systems and space travel to tanks and military logistics.
The ETF comprises 20 leading European armaments. Around half of the sales of these companies come from Europe-a clear advantage over competing defense ETFs, which often rely on US values. This stronger European focusing means that the companies contained in the WisdomTree ETF are rated cheaper and thus have higher growth opportunities.
Top positions: Rheinmetall leads the field
With a weighting of 18.5 percent, Rheinmetall is the largest position in the ETF. The German armaments group had orders worth 12.7 billion euros in the first half of 2024-including tank deliveries to Ukraine and artillery at NATO countries. But the evaluation is ambitious: that Course-profit ratio (KGV) In addition to the increased level of evaluation, there are about 38.
Other top positions include Leonardo (15.4 percent), Saab (10.2 percent), BAE Systems (10.0 percent) and Thales (9.2 percent). The total cost rate of the ETF is 0.40 percent. The ETF is physically and fully replicating to the underlying index – that is, the shares are actually bought. Dividends are thesaur and reinvested.
Potential return despite political risks
The WisdomTree ETF offers investors an interesting way to rely on the European defense boom. Despite political risks and high evaluation of individual titles such as Rheinmetall, the chances are good that the ETF will perform better in the long term due to its European focus and cheaper reviews than competing products. The new ETF could therefore be a worthwhile admixture in the portfolio for investors with high risks – especially in view of the geopolitical uncertainties and massive upgrading in Europe.
More ETFs for the turning point
- Infrastructure ETF of Global X: The ETF invests in companies that are likely to benefit from a possible increase in infrastructure activities in Europe. This includes companies that work in the areas of traditional infrastructure, infrastructure networks, clean energy infrastructure and digital infrastructure.
- Bau-ETF from investco: Companies are represented here that benefit from the gigantic infrastructure measures. The modernization of streets, rails and energy networks will devour billions and build construction companies.
Disclaimer:
No investment advice. No call to buy or sell securities.