Exposure to the world’s largest defence market as it enters a new innovation cycle
World’s largest defence market
The US remains by far the world’s largest defence spender, with a proposed $1.5 trillion national defence budget for 2027. This supports exposure to the deepest defence market globally, across major platforms, cyber security, space, advanced systems and defence technology.
US domiciled defence companies
The US is home to many of the companies shaping the next phase of military capability. The Pentagon is accelerating the adoption of autonomy, cyber-defence, software and other advanced technologies, while working with both established contractors and newer defence technology firms.
Strengthening the defence industrial base
US defence policy is increasingly focused on supply-chain resilience, production capacity and reducing reliance on narrow supplier bases. This broadens the investment case beyond the largest prime contractors to companies providing components, software, electronics, systems and mission-critical technologies.
NATO member domiciled defence companies
Future of US Defence UCITS ETF (GIJO) aims to provide exposure to US companies benefiting from the world’s largest defence market, as America increases spending and accelerates investment in next-generation military capability.
The US Defence ETF focuses on US-listed companies headquartered and/or domiciled in the United States, with exposure to defence equipment, aerospace and marine, cyber security, and defence technology. Constituents must derive more than 50% of revenues from relevant defence or cyber-defence activities, including contracting with NATO member nations.
With the US proposing $1.5 trillion in total defence resources for 2027, and the Pentagon placing renewed emphasis on innovation, supply-chain resilience and production capacity, GIJO offers targeted exposure to companies supporting America’s adaptation to a new era of military technology.
*This fund changed its strategy on 15/07/2026
Key Risks
Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility. The defence industry can be significantly affected by government regulation and spending policies because companies involved in this industry rely, to a significant extent, on government demand for their products and services. The financial condition of defence companies is heavily influenced by government defence spending, which may be reduced in efforts to control government budgets. When you invest in ETFs your capital is fully at risk and investors may not get back the amount they invested. Please note this is not an exhaustive list of risks. Other risks may apply. Further risks are disclosed in the KIID and Prospectus.
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: 47
The VettaFi American Future of Defence Index includes US-listed equities of companies headquartered and/or domiciled in the United States. Companies must derive more than 50% of revenues from the manufacture and development of military aircraft or defence equipment, defence technology applications, or cyber-security contracting with a NATO member nation, verified by publicly available contract information.
Eligible companies must meet market-cap, free-float and liquidity thresholds and comply with UN Global Compact principles and OECD Guidelines. The index selects up to the top 50 eligible companies by free-float market capitalisation, uses a modified free-float market-cap weighting approach, applies issuer caps and rebalances quarterly.
US defence exposure generally means investing in American companies that generate significant revenue from military equipment, defence technology, aerospace, maritime systems or cybersecurity. This may include established contractors manufacturing aircraft, missiles, ships and armoured vehicles, alongside specialist businesses supplying software, electronic systems, sensors, components and cyber-defence services. It is more targeted than broad US equity exposure because performance is closely linked to defence budgets, government procurement and military modernisation priorities.
US defence spending is important because the federal government is the main customer for many American defence companies. Higher spending can support new contracts, increased production, research programmes and the replacement of ageing military equipment. However, announced budgets do not automatically translate into company revenue, as funding must pass through political approval, procurement and contracting processes.
Government contracts can provide defence companies with long-term revenue visibility, but they also create political and customer concentration risk. Major programmes may run for decades, but revenue can be affected by elections, changing military priorities, budget negotiations, contract delays and programme cancellations. Investors may therefore want to consider contract backlogs, programme exposure, margins and execution risks rather than focusing only on headline defence spending.
US defence exposure may include traditional military contractors and technology-led companies supporting modern defence operations. Relevant activities can include military aircraft, missiles, naval vessels, communications, electronic warfare, surveillance, satellites, cybersecurity, data analytics and autonomous systems. Component manufacturers and engineering specialists may also qualify where their products are important to defence platforms.
Companies can be selected using rules covering geography, defence-related revenue, company size, liquidity and business conduct. A methodology may require businesses to generate a significant proportion of revenue from military equipment, defence technology or qualifying cybersecurity activities. Position limits may also be applied to prevent the largest companies from dominating the exposure. Methodology matters because different revenue thresholds, exclusions and weighting rules can produce substantially different portfolios.
Leading companies associated with the US defence sector may include General Dynamics, RTX, Lockheed Martin, Northrop Grumman and L3Harris Technologies. Technology and cybersecurity companies such as Palantir, Palo Alto Networks, Fortinet and CrowdStrike may also be relevant where they support government, military or national-security systems. Curtiss-Wright is another example of a specialist supplier of engineered components and technologies. Company inclusion and portfolio weights can change, and these examples should not be interpreted as recommendations.
US defence exposure is generally more concentrated and more dependent on government policy than broad US equity exposure. A broad market allocation usually includes companies from many industries, whereas defence-focused exposure is more closely linked to military procurement, geopolitical developments and national-security priorities. This concentration can lead to meaningful differences in performance and volatility compared with the wider US stock market.
Cybersecurity is included because military capability increasingly depends on secure networks, communications, software and data infrastructure. Governments must protect classified systems, operational networks, satellites and critical infrastructure from espionage, disruption and cyberattacks. Cybersecurity companies may support these needs through network protection, threat detection, cloud security, identity management and intelligence analysis.
Yes, defence exposure can raise ESG and ethical questions because companies may be involved in weapons production, military operations or sensitive government programmes. Some investors view defence as supporting national security, while others may consider certain activities inconsistent with their ethical objectives. Screening approaches can also vary, particularly in relation to controversial weapons, nuclear weapons, civilian firearms and international conduct standards.
Potential risks include sector concentration, dependence on government spending, contract delays, programme cancellations, cost overruns and changing political priorities. Defence companies may also face export restrictions, regulatory investigations, supply-chain disruption and reputational controversies. Technology-led businesses can carry additional valuation and execution risk, while established contractors may depend heavily on a small number of major programmes.
Weighting rules determine whether exposure is dominated by the largest defence contractors or spread more broadly across specialist suppliers and technology companies. Position caps can reduce reliance on a small number of businesses, while regular rebalancing can remove companies that no longer meet eligibility requirements and add newly qualifying companies. These rules can affect concentration, turnover, risk and performance.
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
Why cybersecurity and defence may be complementary themes?
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From tanks to code: why the next defence boom will be digital
Future of Defence Report | September 2026
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Future of Defence Report | August 2026
The Future of Defence: Cybersecurity & Autonomous Systems
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