Defence-Thematic ETFs and the Pricing Question: A Financial Analyst’s Perspective
The rapid expansion of defence-thematic ETFs in 2025 illustrates how geopolitics, fiscal policy and investor positioning are converging in real time. The VanEck Defense UCITS ETF (DFNS) and the WisdomTree Europe Defence UCITS ETF (WDEF) have become the clearest expressions of this shift—DFNS as a global pure-play vehicle and WDEF as a regional proxy for Europe’s rearmament cycle. Their growth has been extraordinary: DFNS rose from roughly US$4 billion in March to US$7.6 billion in November, while WDEF amassed more than €3.4 billion within eight months of launch. Crucially, this expansion is being driven not only by market performance but by unprecedented inflows, with July 2025 alone bringing more than US$419 million into DFNS and over €300 million into WDEF. Against this backdrop, a key question now emerges: is the sector’s momentum already fully reflected in defence equities, or does the current cycle still leave room for further upside?