Providing investment in European defence

The defence sector is emerging as a focus area for investors globally, as spending in defence reached $2.46 trillion in 2024, an average of 1.9% of GDP¹, amid ongoing geopolitical shifts, policy uncertainty and market volatility.

In Europe, defence spending rose by nearly 12%, with national governments increasing defence budgets¹ and the European Commission set to mobilise up to €800bn in defence funding² in response to evolving security challenges.

This creates a gap in European portfolios that are underexposed to the sector, presenting an opportunity to investors.

We provide an exposure to European defence for investors to express more detailed views, as they look to capture opportunities and mitigate risks within the defence sector.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

¹ Source: International Institute for Strategic Studies (IISS) as of February 2025.

² Source: European Commission, White Paper for European Defence – Readiness 2030, as of March 2025.

³ Not involved in Controversial Weapons activities, as identified by ISS ESG. The following weapons are considered controversial: anti-personnel mines, biological weapons, chemical weapons, cluster munitions, ISS ESG’s Controversial Weapons Research is designed to identify all companies in a corporate structure that have control over the relevant business activities, i.e., all immediate parent companies up to the ultimate parent. Companies identified as ‘Red’ are excluded. If there is not data for a company, that names is excluded.

⁴ Companies are assessed against their adherence to international norms on human rights, labor standards, environmental protection and anti-corruption established in the UN Global Compact and the OECD Guidelines. Companies identified as ‘Red’ are excluded. ISS ESG identifies companies as ‘Red’, if they fail to respect established norms and where the issue remains unaddressed. If there is no data for a company, that name is excluded.

⁵ Traditional defence indices have provided higher exposure to aerospace.

⁶ Military Equipment and Services Revenue is based on ISS ESG maximum revenue share factor data. This dataset identifies the maximum amount of revenue estimated or company reported to be derived from involvement in a business activity as a percentage of the issuer’s total annual revenue.