Exposure to NATO defence and cyber defence spending, with strict screening
Enhanced screens and SFDR Article 8 classification
The ETF is classed as Article 8 under SFDR. It excludes controversial weapons, thermal coal, and tobacco, with strict ESG and human rights filters. Designed for investors seeking responsible exposure to defence in a shifting geopolitical world.
NATO member domiciled defence companies
The ETF only includes defence firms based in NATO countries, aligning with investor concerns while addressing global security needs. This reduces exposure to firms from potential adversaries and reinforces NATO’s role as a defensive alliance.
Defence spending is rapidly growing
Despite record spending on defence in 2024, NATO’s collective outlay remains only 2.7% of members’ combined GDP. Substantial and sustained increases in defence spending will be needed for NATO to reach its 5% of GDP target.
Responsible approaches to defence
Defence exposure can still reflect investor values. Screens that exclude controversial weapons, tobacco, and thermal coal – while applying ESG and human rights filters – may offer a way to access defence with greater care and consideration.
Focusing on NATO-based companies
Focusing on defence companies based in NATO countries may reduce geopolitical risk and align with the values of investors who want exposure to the sector while supporting firms operating within established democratic alliances.
Future of Defence Screened UCITS ETF (NATE) aims to provide exposure to companies benefiting from rising NATO member defence and cyber defence spending, with strict screening.
For investors looking for a more considered approach to defence, the ETF offers the opportunity to gain SFDR Article 8 defence exposure – and no exposure to controversial weapons.
Constituents are limited to companies headquartered in NATO member states – countries which are bound by mutual defence commitments, democratic accountability, and established arms export controls.
Key Risks
Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility. Investors’ capital is fully at risk and may not get back the amount originally invested. Exchange rates can have a positive or negative effect on returns. For a complete overview of all the risks, please refer to the ”Risk Factors” in the Prospectus.
July 9 2026, 2:00pm BST
NATO leaders meet in Ankara on 7–8 July at a pivotal moment for global security.
Following last year’s landmark 5% defence spending pledge, the summit comes as questions over US troop commitments, Iran, and Ukraine put alliance unity firmly in focus.
Source: HANetf, data as of 31.08.2026. Please note that all performance figures are showing net data. Performance before inception is based on back-tested data. Back-testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (”Prospectus”) before investing and should refer to the section of the Prospectus entitled ”Risk Factors” for further details of risks associated with an investment in this product. If fund is less than 12 months old, YTD field will be calculated since inception. When you invest in ETFs your capital is at risk.
No. of holdings: 60
Constituent business operations must derive more than 50% of their revenues from the manufacture and development of military aircraft and/or defense equipment (military armored vehicles & tanks, weapon systems and missiles, munitions and accessories, electronics & mission systems, and naval ships), defense technology applications, or cyber security contracting with a NATO member nation verified by publicly available contract information.
Companies involved in the production development or maintenance of anti-personnel mines, biological or chemical weapons, cluster munitions or depleted uranium are excluded from consideration for the index.
Additionally, companies must derive less than 5% of their revenue from tobacco manufacturing, distribution, and the sale of tobacco products as well as not derive any revenue from the exploration, mining, or refining of thermal coal.
The VettaFi Future of Defence Screened Index rebalances quarterly.
Screened defence refers to defence-related companies that are evaluated against ethical or ESG criteria, excluding those involved in controversial weapons, human rights violations, or other practices deemed objectionable under international standards.
Screening helps identify companies that contribute to defence capabilities while adhering to ethical or ESG guidelines, allowing stakeholders to focus on responsible defence practices.
Companies typically include those producing conventional defence equipment, cybersecurity systems, aerospace platforms, and supporting technologies, provided they meet ESG or ethical standards.
Ethical standards may restrict the production of controversial weapons, ensure compliance with international law, and promote responsible business practices in operations, procurement, and exports.
Screened defence focuses on companies that meet defined ethical or ESG criteria, reducing exposure to controversial activities, whereas standard defence exposure includes all companies in the sector regardless of ethical considerations.
Risks include geopolitical tension, regulatory changes, procurement delays, and technological obsolescence. Companies may also face reputational risks if ESG standards are not maintained.
Regional conflicts or heightened security threats can drive demand for defence capabilities. However, companies must balance operational priorities with adherence to ethical and ESG standards.
Advances in cybersecurity, drones, autonomous systems, AI, and precision weapons enhance capabilities while companies must ensure these technologies are used responsibly under ESG guidelines.
Yes. Defence companies operate in complex regulatory environments, often across multiple countries, making adherence to ESG criteria challenging while still meeting operational and national security requirements.
Screened defence is evolving with increased focus on transparency, ethical supply chains, responsible technology deployment, and compliance with international treaties, reflecting a trend toward sustainable and accountable defence practices.
Disclaimer: These FAQs have been generated with the assistance of AI and may contain errors or omissions. They are provided for general information only and do not constitute investment advice, a recommendation, or an invitation to buy or sell any investment.
Explore our expert-written monthly fund reports, periodic reviews, and key insights.
What investors should consider before investing in Defence ETFs in 2026
June 2026
Defence 2.0: How Drones and Cyber are reshaping investments
What does AI mean for cyber defence?
Why cybersecurity and defence may be complementary themes?
February 2026
Iran crisis – four sectors to keep on your radar
March 2026
From tanks to code: why the next defence boom will be digital
Reconciling responsibility with rearmament
January 2026
Holding case study: Bae Systems
March 2025
Holding case study: Rheinmetall
Trump stance will force NATO countries to spend more whether elected or not
May 2024
Future of Defence Report | September 2026
September 2026
Future of Defence Report | August 2026
Future of Defence Report | July 2026
July 2026
Future of Defence Report | June 2026
Future of Defence Report | May 2026
May 2026
Defence ETF Report | April 2026
April 2026
Defence ETF Report | February 2026
Future of Defence Report | January 2026
Investing in the Defence Supercycle
The Future of Defence: Cybersecurity & Autonomous Systems
May 2026 |
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