VanEck Global Defence ETF (ASX: DFND) $36.92

Defence ETFs have quickly become one of the market’s fastest-growing thematic exposures – nothing unusual here, ETFs follow performance as they search for turnover. VanEck launched DFND in September 2024 as Australia’s first dedicated defence ETF, with BetaShares (ARMR) and Global X following within weeks as investor demand surged alongside rising geopolitical tensions and record global military spending. Both funds peaked in January 2026 amid peak optimism around European rearmament and NATO spending before pulling back, although DFND has still delivered the stronger return since inception.

The key difference lies beneath the surface. DFND is tilted towards large, established defence primes such as Lockheed Martin, BAE Systems, Rheinmetall and General Dynamics, while ARMR takes a broader approach with greater exposure to emerging defence technologies, including drones, AI and space, alongside Australian names DroneShield (DRO) and Electro Optic Systems (EOS). Recent newsflow continues to support the theme, with TKMS lifting guidance after strong demand and Hanwha Aerospace’s bid for Austal’s US shipbuilding business highlighting potential strategic consolidation across the sector.

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.

• We like the DFND ETF in the $36-37 region i.e. around current levels, though it’s a volatile space.