NATO aligned Defence ETF exceeds $250m AUM

  • Future of Defence UCITS ETF (Ticker: NATO) has now reached $253.02 million AUM following over $200 million net inflows in 2024, year-to-date.
  • NATO provides exposure to NATO and NATO+ ally defence and cyber defence spending.
  • It is the only ETF to combine traditional industrial defence companies with cybersecurity defence contractors.
  • The defence ETF recently won the award for Best Innovative Newcomer at the XENIX ETF Special Awards UK 2024.

When you invest in ETFs your capital is at risk.

April 2024, London

HANetf, Europe’s first and only independent white-label UCITS ETF and ETC platform[1], and leading provider of digital asset ETPs, is delighted to announce that Future of Defence UCITS ETF (Ticker: NATO) has reached $253.02 assets under management (AUM) following over $200 million net inflows in 2024.

Launched only nine months ago in July 2023, NATO tracks the EQM Future of Defence Index and seeks to provide exposure to the global companies generating revenues from NATO and NATO+ ally defence and cyber defence spending.

Investors are increasingly aware of the current tense geopolitical climate, accentuated by ongoing conflicts between Russia and Ukraine, and Israel and Hamas.

Accordingly, defence spending is on the rise. In 2023, a record $2.24 trillion was spent—the highest level ever recorded. One particular area of growth is among European NATO members. These countries have been shaken out of their post-Cold War spending slump following the Russian invasion of Ukraine, with renewed efforts to reach the NATO 2% of GDP military spending target.[2]

Most recently, Poland increased its defence spending to almost 4% of its GDP, with Polish President Andrzej Duda saying last month that NATO members should target at least 3%. As Duda said, “alarm bells are ringing.”

But in the 21st century, national security is not just about physical borders and military strength. Governments must now consider safeguarding cyberspace, which has become a new battleground. Cybersecurity attacks increase consistently with growing geopolitical tensions, as noted in the EU’s agency for cybersecurity in its latest Threat Landscape report.[3]

 The ETF provides a well-balanced exposure to global defence firms, as well as a healthy weighting to the increasingly vital cyber component of national security. Hector McNeil, Co-founder & Co-CEO at HANetf

Future of Defence UCITS ETF (NATO) brings these two components of modern defence together, capturing both growing conventional military budgets and the rising need for robust cybersecurity defence.

Using a passive, rules-based approach, companies must derive more than 50% of their revenues from the manufacture and development of military aircraft and/or defence equipment or have business operations in cyber security contracted with a NATO+ member country.

The maximum exposure by country is 60%, enabling non-U.S., NATO+ headquartered companies to achieve meaningful weight in the portfolio and providing more diversified global exposure.

In March, the defence ETF was also recognised at the XENIX ETF Special Awards UK 2024, where it was crowned Best Innovative Newcomer ETF.

Hector McNeil, Co-Founder and Co-CEO of HANetf, comments:

“We find ourselves in the midst of geopolitical turmoil – whether it’s the ongoing war in Ukraine, conflict between Israel and Hamas, or Houthi attacks on ships in the Red Sea – it’s clear that the post-Cold War world is over. After years of underspending, NATO members and allies in Europe are finally taking their share of defence spending seriously. Poland, for example, is now spending 4% of its GDP on defence.

“But it is not just about physical defence – a new theatre of war has emerged in cyberspace, and it has become critical to invest in cyber defence.

“Investors are recognising this trend, as evidenced by Future of Defence UCITS ETF seeing over $200 million net inflows so far this year. The ETF provides a well-balanced exposure to global defence firms, as well as a healthy weighting to the increasingly vital cyber component of national security. The ETF’s NATO screen also allows investors to be sure their exposure is not to geopolitically irresponsible actors, as well as capture the growth opportunity around European NATO’s vital need to rebuild their military capabilities. Defence related funds exist but they tend to be industrials heavy and not focused on NATO and its allies which, by definition, is a defensive alliance and not an aggressor. NATO is a unique ETF on this basis.”

“We deliberated long and hard on the focus of a defence ETF that reflects the rising geopolitical tensions, but also reflects investor’s concerns around the morality of investing in the defence sector. NATO is a defensive alliance and as stated by NATO, “deterrence and defence is one of NATO’s core tasks.” We felt that a deterrence-focused ETF made more sense in these modern times, and NATO’s founding charter highlights collective defence. We considered ESG screens but felt they were less appropriate.”

[1] As shown in the ETF Database.

[2] https://www.sipri.org/media/press-release/2023/world-military-expenditure-reaches-new-record-high-european-spending-surges

[3] https://www.enisa.europa.eu/publications/enisa-threat-landscape-2022

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