NATO countries' defence spending now the focus of a new ETF
ETF
Posted by MoneyController on 14.07.2023
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A passive thematic fund tracking the defence spending of NATO countries is now available to investors. The ETF tracks the performance of an index that aggregates companies involved in the defence spending chain of NATO countries.
The war between Russia and Ukraine has brought the issue of military spending and the role of supranational organisations such as NATO to the fore in many countries. As Gabriele Petrucciani writes in the Corriere della Sera, military spending will reach USD 2.2 trillion in 2022. Investors have also started to take an interest in this market sector. One of the most interesting cases is that of Hanetf, which has launched a passive fund focused on defence spending.
The passive fund has already been launched on the Frankfurt and London stock exchanges and is now coming to Italy. It is an ETF that tracks the Eqm Future of Defence, an index that aggregates companies involved in the defence spending of NATO countries (Poland, for example, could spend as much as 4% of its GDP on defence). As Hanetf founder and co-CEO Hector McNeil explains, one of the sectors considered strategic from a defence perspective is cybersecurity.
McNeil points out that the cyber environment has become one of the places where wars are fought today. Therefore, defence spending is not only spent on weapons, but also on cyber protection programmes.
In terms of the composition of the ETF, McNeil says that when cybersecurity is taken into account, 50 per cent of the companies in the index are dependent on military spending. Another feature of the fund is that it takes into account NATO-related military spending, unlike other funds that invest in specific industries related to military production. The fund's holdings are updated every three months. In terms of costs, the fund has a total expense ratio (TER) of 0.49%.
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