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VanEck will push ahead with a recently launched ASX-listed ETF focused on global defence stocks.
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The VanEck Global Defence ETF reportedly offers investors an opportunity to invest in stocks typically unavailable to retail investors. It was listed on the ASX last month on 12 September.
The business already runs a European UCITS-listed Defense UCITS ETF, which was launched at the end of March 2023 and is US$1 billion in size. Its largest exposures include US software company Palantir, US national security company Leidos, and US military contractor Booz Allen Hamilton.
“Unfortunately, the world has changed since the days of celebrating the peace dividend. Where countries used to extol the economic benefits of reduced defence spending, they’re ramping up military expenditure,” said VanEck CEO and Asia-Pacific managing director Arian Neiron.
“Investors are adapting to the likely reality that this will keep rising in the years ahead. DFND extends on VanEck’s global footprint. In Europe, we were the first to launch a global defence fund, attracting substantial flows since launch in 2023. Given strong demand locally and the consistent and identifiable trends supportive of the sector’s growth, we decided to bring this investment strategy to the ASX.
“Global defence companies benefit from a unique investment complex. Demand is driven by structural growth drivers, and cash flows are typically secured by long-term government mandates. This can be a strategic allocation for investors, providing a different form of equity risk management.
“The defence industry has historically been at the forefront of technological development and advancement. This sector generally places a greater emphasis on research and development, leading to numerous innovations that have filtered through to mainstream applications such as GPS navigation, epinephrine autoinjectors (better known as EpiPens), the internet, and super glue.”
It has outlined three reasons that defence companies are attractive investments:
- Defence expenditure commitments from global governments provide certainty and are typically mandated. More recently, the ongoing geopolitical environment has led to increased spending.
- The persistent expansion of global military expenditure has been a reliable trend, and it is diversified across geographies.
- The defence industry has historically been at the forefront of technological development and advancement.
VanEck currently runs a range of thematic ETFs, including pharmaceuticals, robotics, gaming and green infrastructure. Earlier this year, the ETF provider added four new hires as it tries to increase its market share with financial advisers.
Connor Goggins joined VanEck’s business development and client solutions team from Bloomberg as its newest business development associate. In its product and marketing teams, the firm hired Jenneth Orantia, Jessica Nightingale, and Emily Wang.
Speaking in June, Neiron said there is room for the firm to grow its presence with advisers as ETFs are tipped to grow to $220 billion by the end of 2024.
“Demand is ramping up as advisers get better acquainted with the opportunities our investment strategies bring.
“However, there’s still a lot of room to grow. ETFs currently make up only a fraction of the total $4.75 trillion of funds under management in Australia. Our market-leading ETF strategies have the potential to capture a much bigger slice of the pie, and our new hires will help bolster our efforts to achieve that growth,” he said.
