The VanEck Global Defence ETF (ASX: DFND) has been among the best performers on the ASX this year.
But if you think you are too late to the party, think again. That's the view of VanEck's Deputy Head of Investments, Jamie Hannah, which is feeling bullish about this strong performing ASX ETF.
With global defence spending surging and geopolitical tensions showing no signs of easing, the Vaneck Global Defence ETF's exposure to the world's largest defence, aerospace, and military technology companies couldn't be more timely.
Here are three key reasons why this ASX ETF could continue to outperform from here.
A wave of global defence spending is underway
What was once considered a niche theme is now front and centre for world leaders — especially across Europe.
Since the return of US President Trump and renewed pressure on NATO, European nations have significantly ramped up their defence commitments. At a recent European Union summit, leaders agreed to boost spending by 800 billion euros, while Germany is discussing a 500 billion euros modernisation package.
The UK is also lifting its defence budget to 2.5% of GDP, and NATO allies across the board are accelerating investment in military readiness.
This isn't short-term stimulus — it marks the beginning of a structural shift in geopolitical priorities.
And with the Vaneck Global Defence ETF tracking a basket of 28 major global defence companies, this rising tide of government contracts and capital expenditure is already flowing into the companies it holds.
Not all defence ETFs are created equal
What sets the Vaneck Global Defence ETF apart is the strict focus of its underlying index, the MarketVector Global Defence Industry Index.
To be included, companies must derive more than 50% of revenue from military and defence industries — ensuring pure-play exposure.
Importantly, Hannah highlights that the Vaneck Global Defence ETF is the only defence ETF on the ASX that excludes companies involved in controversial weapons (such as white phosphorus or depleted uranium) and those flagged by UN and OECD norms-based screens.
And while the ASX ETF does not promote itself as an ESG fund, VanEck believes that these exclusions give it a layer of integrity and alignment with humanitarian safeguards that may appeal to values-conscious investors.
In short, it offers the growth potential of the defence sector, without turning a blind eye to the ethical concerns that can surround it.
A diversified play
Another reason to be positive is its diversification. The global defence landscape is no longer just about tanks and jets — it is about data, AI, cybersecurity, and infrastructure. The Vaneck Global Defence ETF captures this transformation.
The ASX ETF includes exposure to companies across aerospace, consulting, software, cyber defence, and electronic systems — meaning investors gain access to both traditional and emerging defence segments.
Overall, this could be one ASX ETF worth considering for a diversified investment portfolio.
