The Rise of Defence-Thematic ETFs and Europe’s Strategic Investment Shift

The expansion of European defence-thematic exchange-traded funds in 2025 marks a significant moment in the financial institutionalisation of Europe’s strategic transformation. The rapid growth of assets allocated to these vehicles signals that defence is no longer perceived solely as a domain of public budgets and procurement cycles but as an investable sector shaped by long-term policy commitments, industrial restructuring and geopolitical constraints. According to data reported by Cinco Días, thematic ETFs in Europe have grown by 67 % since the start of the year, reaching approximately US$76.4 billion by the end of September, with defence funds absorbing two-thirds of all new thematic inflows. This shift suggests the emergence of a new investment thesis: defence is becoming a structural component of Europe’s economic trajectory, driven by sustained public spending, the rise of dual-use industries and the institutionalisation of strategic autonomy. At the same time, short-term price movements underline that this is a volatile segment where structural trends intersect with political and market sensitivities, creating a complex investment landscape that requires careful interpretation.