The DFND ETF was launched on the ASX in September 2024 as the defence space garnered the attention of local investors. The Fund aims to track tracks the MarketVector Global Defence Industry (AUD) Index. It’s fairly small locally with a market cap of ~$220mn but liquidity is sufficient due to its $6bn AUM globally and the larger market cap of the underlying stocks held. The fund’s management fee for this diverse basket of global defence names is 0.65% pa which is reasonable in our opinion. It’s early days on the ASX but tracking has been excellent year-to-date with the ETF up +53.4% while the index is up +52.9%.
- From a regional perspective the ETF’s five main exposures are 51% the US, 11% South Korea, 9% France, 8% Italy, and 6% Sweden.
- The ETF currently holds 37 stocks with its 5 largest holdings being Palantir Tech 8%, RTX Corp 8%, Leonardo SpA 8%, Thales 7%, and Hanwha Aerospace 7%.
The defence sector has run fairly hard through 2025 and while we see further upside we wouldn’t be chasing strength above $35 – DRO has been a relatively extreme example of how defence stocks can retrace gains.
- We like the risk/reward towards the DFND ETF around the $33-34 area.
MM is cautiously bullish towards the DFND ETF
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