Defence-related investing has taken over as the dominant investor theme for thematic exchange-traded funds. If investor flows were focused on technology-related and clean energy exposures in 2021 and 2022, this time is different: flows are now led increasingly and exclusively by defence-related exposures.
This comes as no surprise given the increase in geopolitical tension in the last few years and the response by governments – on both sides of the Atlantic. Flows have accelerated as Europe awakens to the fact that US assistance against potential threats is no longer guaranteed, and the continent will have to build out its own capabilities.
