As of 29/02/2024
Future of Defence UCITS ETF (NATO) provides exposure to the companies generating revenue from NATO and NATO+ ally defence and cyber defence spending.
Global military spending is rising. In 2022, $2.2 trillion was spent on defence — the highest level ever recorded. With the ongoing geopolitical tensions, one area of growth is among European NATO members. But despite such record spending, most European NATO members are still lagging the 2% of GDP target.
In the 21st century, national security is not just about physical borders and military strength. After invading Ukraine in 2014, Russia carried out a multitude of large-scale cyberattacks on the country.
Since the full-scale invasion of Ukraine in 2022, state-sponsored actors have targeted 128 governmental organisations in 42 countries that support Ukraine, highlighting the importance of cyber defence.
The Future of Defence ETF tracks the EQM Future of Defence Index. Using a passive, rules-based approach, companies must derive more than 50% of their revenues from the manufacture and development of military aircraft and/or defence equipment or have business operations in cyber security contracted with a NATO+ member country.
Please remember that the value of your investment may go down as well as up and your capital is at risk.
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Why invest in the Future of Defence ETF?
Increased NATO and NATO+ ally spending:
Despite a record spending on defence in 2022, most European NATO members need to spend more to close the gap and reach the 2% of GDP target outlined by the alliance. As geopolitical tensions continue to worsen, this situation will have to change, and fast.
Need for modernised defence solutions:
Companies exposed to NATO and NATO+ ally spending stand to benefit from the growing need for modernised defence solutions. The rise of data breaches and increasing sophistication of cyberattacks poses a global security threat, driving increased adoption of cybersecurity solutions.
Global growth opportunity:
The defence market is expected to grow at a CAGR of 5.6% to $718.12 billion by 2027, and the global cybersecurity market by a CAGR of 8.9% over the same period. It is likely that these growth rates will accelerate even further to reflect the risks associated with the Russia-Ukraine conflict.
Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility
Investors’ capital is fully at risk and may not get back the amount originally invested
Exchange rates can have a positive or negative effect on returns;
The value of equities and equity-related securities can be affected by daily stock and currency market movements
When you invest in ETFs, your capital is at risk.