In times of conflict, variable income markets usually react with caution because of increased global uncertainty. In these periods, investors often seek refuge from assets considered safe, such as gold and dollar. Still, a specific segment often performs positive performance amid chaos: the defense and aerospace sector.
Index funds that accompany companies in the area – popularly nicknamed “Etfs de Guerra” – Reflect this movement. Some of the main global ETFs linked to the sector recorded up to up to 78% in the year. For comparison purposes, the S&P 500 index rose 12% in the same period, while gold advanced 44.10%, according to data from the TradingView platform.
For Arthur Barbosa, an analyst at Aware Investments, the appreciation of products linked to the sector is related to expectations of increased military budgets in response to geopolitical tensions, which encourages the demand for products and services of defense and aerospace companies, increasing their financial projections and, consequently, the value of their actions and funds that accompany them.
“The structural increase in defense budgets in various regions of the world, added to the predictability of revenues provided by government contracts, can favor the performance of the sector in the long run,” said the expert.
Super budget
Faced with an international scenario still tensioned, with Russia and Ukraine on one side and instability in the Middle East on the other, earlier this week to raise defense spending to 5% do PIB Until 2035, in response to what they classify as a long -term threat represented by Russia and the persistence of terrorism.
And it’s not just governments that are stretching investments in the area. A PWC report released this month pointed out that global investments in defense are on their way to achieve historical records. One sign of this is the growth of the risk capital intended for startups in the sector, which in 2024 has already surpassed the US $ 2.2 billion Invested throughout the previous year – contrary to the drop in contributions in other technology segments.
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Large companies in the sector also reflect this warming. The six largest defense companies in the United States registered a 4% increase in revenue last year, while the volume of backlog orders grew 9%, reaching the record of US $ 530 billionaccording to PWC. In Europe, the five largest in the sector had a 13% increase in revenue, although net profit retreated 2% in the same period.
Okay Ethfs of War?
Thematic ETFs, such as war, can be a way of exposing themselves to structural global trendsaccording to Cauê Mançanares, CEO of Invest. He said that practicality, transparency and diversification are some of the strengths of these products.
Although these ETFs can have greater volatility because they are exposed to geopolitical events and specific budget cycles, they also offer opportunities for investors with more dynamic profile and long -term vision, interested in capturing structural movements of the global economy ”.
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Still, according to Barbosa, from Aware Investments, these ETFs are best suited for bold investors, who are willing to tolerate oscillations in periods of geopolitical tensions. For conservative profiles or those with ex -exit concerns, assets may not be adequate. ‘
He recalled that the segment has similar volatility to the market. He also said that, if on the one hand, revenues tend to be more predictable due to the presence of public contracts, which can soften the oscillations, on the other these assets are subject to strong variations when abrupt changes in the geopolitical scenario occur.
See some of the main market war ETFs:
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| ETF | If | Valuation in 2025 |
|---|---|---|
| Direxion Daily Aerospace & Defense 3× Bull (DFEN) | Nyse ark | 78,47% |
| VanEck Defense UCITS ETF (DFNS) | LSE / XETRA / Borsa Italiana | 64,57% |
| SPDR S&P Aerospace & Defense ETF (XAR) | Nyse ark | 42,55% |
| iShares U.S. Aerospace & Defense ETF (ITA) | Nyse ark | 37,80% |
| First Trust Nasdaq Cybersecurity ETF (CIBR) | Nasdaq | 35,28% |
| Rize Cybersecurity and Data Privacy UCITS ETF (CYBR) | Lse / Xetra | 32,69% |
| Invesco Aerospace & Defense ETF (PPA) | Nyse ark | 32,30% |
| SPDR Kensho Future Security ETF (FITE) | Nyse ark | 31,27% |
| iShares Digital Security UCITS ETF (LOCK) | Lse / Xetra | 15,36% |
| L&G Cyber Security UCITS ETF (ISPY) | Lse / Xetra | -4,23% |
Ethical Risks and Dilemmas
ETFs are also risky. The main, according to Barbosa, is concentration. Although funds are diverse between different companies, they remain restricted to a few sectors whose active are high correlation with each other ”.
Asset performance can also be affected by changes in arms regulations and export laws, the expert said. In the political sphere, he said, they are subject to government changes or changes in weaponry public spending.
It also has, according to Barbosa, the ethical issue. The sector is often the target of debates on humanitarian impacts, which can ward off investors with ex -criteria.
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