A Trillion-Dollar Spending Push Could Put These Defense ETFs in Focus
- Rising defense budgets could create years of opportunity for companies supplying military aircraft, missile defenses, cybersecurity, and advanced technology.
- SHLD, ITA, and PPA offer three ways to invest in that trend, spreading exposure across multiple companies instead of betting on a single contractor.
- Turning spending plans into profits is the key. Investors should weigh each ETF’s holdings and fees while watching whether proposed budgets become funded contracts.
Governments face growing pressure to strengthen their militaries, replace depleted equipment, and prepare for threats that continue to evolve.
Russia’s war in Ukraine and instability in the Middle East have underscored the importance of military readiness. Russia has proposed approximately 17.1 trillion rubles, or $202.6 billion, in defense spending for 2027. That is roughly 27% above its previous budget plan for that year.
Europe’s broader defense goals could require an additional $4.5 trillion to $5.7 trillion over the coming decade. In the United States, the Trump Administration requested a $1.5 trillion defense budget for fiscal 2027.
All wars have underscored the importance of military readiness, with potential opportunity stretching across missile defense, aircraft, surveillance, cybersecurity, and the software that helps military leaders make decisions.
But how can you and I profit from it?
For investors, exchange-traded funds offer a convenient way to explore that opportunity. Instead of picking the contractor most likely to win the next major award, an ETF spreads exposure across multiple businesses. Here are three to consider.
Global X Defense Tech ETF (NYSEARCA: SHLD)
For investors interested in the technology reshaping military operations, the Global X Defense Tech ETF offers a useful starting point. SHLD invests in businesses involved in advanced military hardware, cybersecurity, artificial intelligence, and data analysis. Its portfolio combines established contractors with companies supplying the digital tools increasingly used in defense.
Recent holdings include Palantir Technologies, RTX, General Dynamics, Lockheed Martin, Northrop Grumman, and L3Harris Technologies. It also provides international exposure through companies such as BAE Systems, Rheinmetall, Saab, and Thales. Its expense ratio is 0.50%, equivalent to approximately $50 annually for every $10,000 invested.
iShares U.S. Aerospace & Defense ETF (BATS: ITA)
ITA offers exposure to the American aerospace and defense industry. It tracks the Dow Jones U.S. Select Aerospace & Defense Index and currently lists an expense ratio of 0.37%, or $37 annually per $10,000 invested.
The portfolio includes familiar names such as GE Aerospace, RTX, and Boeing. That combination gives investors exposure to military demand alongside commercial aviation.
Invesco Aerospace & Defense ETF (NYSEARCA: PPA)
The Invesco Aerospace & Defense ETF tracks the SPADE Defense Index and provides exposure to the broader aerospace and defense industry. Its expense ratio is 0.58%, approximately $58 annually per $10,000 invested. PPA offers another way to combine major contractors and aerospace businesses. Some of its top holdings include RTX Corp., GE Aerospace, Boeing, Lockheed Martin, Northrop Grumman, and General Dynamics, to name just a few.
In short…
For investors, the appeal is straightforward: strengthening national defense takes years of investment, and the opportunity extends well beyond the companies building tanks and fighter jets. SHLD, ITA, and PPA offer different ways to participate, without having to guess which company will land the next big contract.
Of course, bigger budget proposals don’t automatically mean bigger profits. Funding still needs approval, contracts take time, and even a strong business can be an expensive stock. Before choosing a fund, compare its holdings, fees, and how much overlap it has with investments you already own.
The key is to look beyond the next headline. If governments follow through on their spending plans, defense could offer a lasting investment opportunity. A carefully chosen ETF can be a practical way to gain exposure while spreading the risk across several companies.
About Author
