MM has been negative towards the space through 2026, believing the news flow was as bad as it gets in terms of global conflict, or as good as it gets for the defence ETFs. However, after correcting more than 30%, the risk/reward profile has become far more balanced, with the sector having lost its “hot” tag enjoyed earlier in the year. Overnight, the more confrontational President lost some of his power, which was reflected by oil’s sharp fall as markets priced in the beginning of the end for the US-Iran War.
One of the main US defence ETFs, the US$12bn iShares US Aerospace & Defence ETF (ITA US), fell ~1.5% overnight as global conflict risks were priced to decrease.
- We like the risk/reward towards the DFND ETF in the $30 area but would be cautious about buying in the near future.
MM is cautiously bullish towards the DFND ETF around $30
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