The Betashares Global Defence ETF (ASX: ARMR) hit a record high of $23.92 during intraday trading on Friday.
The exchange-traded fund (ETF) closed the session at $23.55, up 2.93% for the day.
The ARMR ETF is designed to give investors exposure to the emerging global defence investment theme.
Defence is in the spotlight due to the US asking NATO allies to raise their defence spending to 5% of gross domestic product (GDP).
Increased spending would mean greater investment in companies that sell land, sea, aerospace, and technology products and services.
The ARMR ETF seeks to mirror the performance of the VettaFi Global Defence Leaders Index before fees.
It invests in up to 60 companies that make more than 50% of their revenue from defence products and services.
This includes the development and manufacture of military and defence infrastructure, equipment, and technological solutions.
The ARMR ETF also only holds global companies headquartered in NATO-member and allied countries, such as Australia.
Betashares says defence spending has been increasing since Russia's occupation of Crimea in 2014, and it's accelerating today.
The ETF provider said:
Global defence and security spending has significantly accelerated in response to evolving geopolitical risks, technological advancements, and the growing complexity of modern threats.
This is projected to continue for the forseeable future as nations seek to strengthen their strategic defences.
Roughly 57.5% of the ETF's portfolio is in US shares, 11.3% in Germany, 10.8% in France, 9.1% in Britain, and 3.3% in South Korea.
About 82.7% of the ARMR ETF is in aerospace and defence, 9.7% in application software, and 6.9% in research and consulting services.
The ETF's top five holdings are Rheinmetall AG (ETR: RHM) shares at 10%, Palantir Technologies at 9.7%, BAE Systems PLC (LSE: BA) at 7.9%, Safran SA (EPA: SAF) at 7.3%, and Raytheon Technologies Corp (NYSE: RTX) at 7.1%.
There are no ASX shares in the ARMR ETF's portfolio.
ARMR only began trading in October last year and it's already shooting the lights out.
Check this out.
Say you invested $10,000 in ARMR ETF when it listed…
Betashares launched the ARMR ETF on the ASX on 4 October last year at $15.20 per unit.
So, let's say you invested $10,000 at that price. That would have bought you 657 units (for $9,986.40).
There's been an astonishing capital gain of $8.35 per unit since then. That's just under a 55% return.
In dollar terms, that's a $5,485.95 gain for you.
Therefore, your portfolio is now worth $15,472.35.
In terms of dividends (called 'distributions' with ETFs), ARMR intends to pay a distribution semi-annually.
At the time of writing, it has not yet paid a distribution.
After a near-55% gain in less than a year, it's unlikely that this has perturbed investors.
While the ARMR ETF is pretty new to the market, the VettaFi Global Defence Leaders Index has been around since 2017.
There is a yearly management fee of 0.55%.
