NATO-focused Future of Defence ETF Surpasses $500m AUM Milestone
16 OCT, 2024
By Jose Luis Palmer from RankiaPro Europe
HANetf, Europe's first independent white-label UCITS ETF platform, has announced that its Future of Defence UCITS ETF (ticker: NATO) has reached a significant milestone, accumulating $508.65 million in assets under management (AUM). Launched in July 2023, the ETF provides investors with exposure to defence and cyber defence spending by NATO and NATO+ ally member states.
This ETF stands out for its unique “NATO screen,” which restricts investments to companies domiciled in NATO or allied nations. This strategy is designed to address the concerns of investors who might be wary of defence investing but recognize the importance of aligning with current geopolitical realities. By focusing on NATO countries, the ETF ensures its holdings do not include companies from nations that could potentially become adversaries to the alliance.
A recent HANetf survey of European wealth managers, highlighted in their Thematic & Digital Assets Review, revealed that 98% of investors believe the domicile of defence companies is crucial, and 94% consider defence investing to be compatible with ESG (Environmental, Social, and Governance) principles. This shows growing support for a more nuanced approach to defence investing amid rising global tensions.
The increasing instability in Europe and the Middle East has amplified the need for heightened defence spending. Historically, most European NATO members have fallen short of the 2%-of-GDP target for defence spending, with only 7 members meeting or exceeding it. However, this number is expected to rise to 23 members this year, indicating a shift in European defence priorities, which could benefit companies in the sector.
With nearly $400 million in net new assets year-to-date, the Future of Defence UCITS ETF has attracted significant interest, reflecting strong investor appetite for defence-related investments. Notably, it has become the first UCITS ETF on the HANetf platform to surpass the half-billion AUM milestone, further solidifying its position in the market.
We are delighted to see NATO ETF exceed the $500 million AUM milestone just over a year since its launch. The ETF’s rapid growth demonstrates, in our view, changing attitudes among investors towards the defence theme. With geopolitical tensions in Europe and the Middle East, investors are beginning to recognise the crucial role that defence plays in protecting our society.
The ETF’s NATO screen sets it apart from its peers, ensuring that investors are gaining exposure to NATO and NATO+ ally domiciled defence companies, while avoiding companies operating in countries that could one day be adversaries to the alliance.
European NATO members are realising that the years of chronic underspending on defence have left them vulnerable, and doubling down on defence spending has become a necessity. Defence companies across Europe will have to step up to the mark, and expand their operations to address the shortages in ammunition and equipment.
Hector McNeil, Co-Founder and Co-CEO of HANetf
