Background: Growth of the Defense Sector
Global geopolitical tensions, particularly since the outbreak of the Ukraine war and other regional conflicts, have significantly increased the demand for armaments. National governments are ramping up their investments in defense capabilities, leading to strong growth in the sector. European countries are also increasing their defense spending – a trend described as a “once-in-a-generation expansion.”
Performance of the VanEck Defense ETF
- YTD Return: The VanEck Defense ETF recorded an annual return of over 50% by mid-June 2025, depending on the location, between 51.58% and 52.74%.
- Net Asset Value (NAV): The NAV was approximately $55 or €48–49 per share on June 13, 2025.
- Total Assets: Managed assets have grown to around $5.8 billion – a testament to investors’ strong interest.
- Technical Development: Analysts predict a further increase of about 21% over the next three months, with the price range expected between €52 and €60.
Composition and Diversification
The ETF tracks the MarketVector™ Global Defense Industry Index and invests in leading companies in defense technology, cybersecurity, and services for national defense industries. The broad diversification across several countries (currently eight) helps to reduce risk – even though individual European defense stocks have sometimes risen more sharply than the ETF as a whole.
| Feature | Value/Information |
|---|---|
| YTD Return | approximately 52% |
| NAV | approximately $55 / €48–49 |
| Total Assets | approximately $5.8 billion |
| Number of Stocks | approximately 29 |
| Countries | Eight |
| Average P/E Ratio | approximately 30 |
Opportunities & Risks
Opportunities:
- Strong Demand: Geopolitical uncertainties drive demand for defense solutions.
- Diversification: The ETF provides access to a wide range of companies from various countries.
- Growth Prospects: Analysts see further potential for price gains.
Risks:
- Market Risk & Volatility: Despite diversification, market risk remains; individual stocks can fluctuate significantly.
- Sector Concentration: A high focus on the defense sector can be problematic during industry downturns.
- Liquidity Risk: During turbulent phases, liquidity shortages can occur.
“Investors should be aware: They can lose their entire invested capital.”
— Warning notice in the ETF prospectus
Conclusion
The VanEck Defense ETF is currently benefiting massively from the globally heightened need for security and the associated investment surge in the defense sector. For investors, it offers a way to diversify within a volatile market – however, they should be aware that losses are also possible here and careful analysis as well as regular monitoring are required.