As geopolitical tensions continue to rise, so does the demand for defense sector investments. Leading investment company VanEck has reported strong momentum in its VanEck Defense UCITS ETF, which has seen impressive growth since its launch in March 2023. The ETF has surged by 55% in 2024 and is already up approximately 8% in early 2025, now boasting assets under management (AUM) of $1.8 billion.
VanEck Defense ETF: A Strong Performer in 2024 and Beyond
The VanEck Defense UCITS ETF has emerged as one of the standout performers in the defense sector. Launched by VanEck’s European arm, this ETF tracks companies primarily engaged in the defense and aerospace industries. The strong performance of the ETF is largely attributed to the ongoing global geopolitical tensions and investor optimism surrounding the sector.
Martijn Rozemuller, CEO of VanEck EU, highlighted that consistent inflows have fueled the ETF’s growth, with the evolving geopolitical climate serving as a key driver of investor interest. “Since the launch of our fund, we’ve experienced consistent inflows with the ongoing global geopolitical tensions being the main interest driver,” Rozemuller stated. This suggests that defense sector ETFs are becoming increasingly attractive to investors seeking stability amidst uncertainty.
Trump’s Impact on Defense Spending and ETFs
Investor sentiment in the defense sector has significantly shifted in recent years, with growing support from government policies. A key factor in this shift is the stance of President-elect Donald Trump, who has been vocal about increasing defense spending. Earlier this month, Trump proposed that NATO members should increase their defense spending to 5% of their GDP, a significant rise from the current 2% target. This proposal signals stronger support for defense companies, further solidifying the sector’s growth potential.
As Rozemuller pointed out, the defense sector, once avoided by institutional investors, is now drawing considerable attention. “As the political climate evolves, so too does investor sentiment towards defense stocks,” he said. The sector, once considered taboo by many, is now seen as a safe and lucrative investment, thanks to favorable government policies and increased global tensions.
Top Holdings in the VanEck Defense ETF
The VanEck Defense UCITS ETF holds several high-profile companies that play a significant role in the defense and aerospace industries. Among its top holdings are:

Palantir Technologies (NASDAQ:PLTR) – A leader in big data analytics and software development for defense and intelligence agencies.
Thales (EPA:TCFP) – A French multinational that provides advanced defense and aerospace systems.
Booz Allen Hamilton (NYSE:BAH) – A consultancy firm that provides technology and management consulting services to the defense sector.
Leonardo (LON:LEO) – An Italian aerospace and defense company specializing in military technology.

These companies are positioned to benefit from the increasing defense budgets and the global push for enhanced security measures, making the ETF an attractive option for investors looking to gain exposure to the growing defense sector.
The Future of Defense ETFs and Global Geopolitics
The continued growth of the VanEck Defense UCITS ETF underscores the increasing demand for defense stocks as a safe investment in times of geopolitical uncertainty. As the political climate evolves with President Trump’s proposals, investors are likely to see more robust growth in this sector. With major players in the industry set to benefit from government defense spending and global instability, ETFs focused on defense stocks are expected to remain a strong choice for investors in the years to come.
As governments worldwide consider increasing their defense budgets, including NATO members responding to Trump’s proposals, the demand for defense-related ETFs, such as VanEck’s offering, will likely continue to rise.
For investors keen on understanding the defense sector’s growth potential, tracking developments in defense budgets and staying informed about the companies leading the charge will be key to making informed decisions. In the case of VanEck’s ETF, the blend of geopolitical factors and strong industry fundamentals positions it as a top choice for investors looking to capitalize on the increasing demand for defense technology and services.