Defense ETF Comparison 2026
Rising defence budgets across Europe have turned the defense sector into one of the most sought-after investment themes. We compare the leading defense ETFs (UCITS) by ISIN, total expense ratio and top holdings, and explain what you need to watch out for when it comes to concentration, ESG and volatility.
Why defense ETFs are in demand in 2026
Since 2022, defence spending in Europe has risen sharply — NATO members have committed to higher budget quotas, and Germany has set up a special fund for its armed forces. Listed defence and security companies are the beneficiaries. A defense ETF bundles these stocks together, so you don’t have to bet on a single share such as Rheinmetall.
The leading defense ETFs compared
Three UCITS ETFs cover the defense theme for European investors. They differ above all in their geographic focus: a pure Europe strategy versus a global approach with US heavyweights such as Lockheed Martin and RTX.
Defense ETFs (UCITS, as of June 2026)
| ETF | ISIN | TER p.a. | Focus |
|---|---|---|---|
| VanEck Defense UCITS ETF | IE000YYE6WK5 | 0.55 % | global (USA + Europe) |
| HANetf Future of Defence | IE000OJ5TQP4 | 0.49 % | global, NATO + allies |
| WisdomTree Europe Defence | IE0002Y8CX98 | 0.40 % | Europe only |
What’s inside a defense ETF?
The composition depends on the focus. European products are often heavily concentrated in German stocks:
- European heavyweights: Rheinmetall (RHM), RENK, HENSOLDT, BAE Systems, Thales, Leonardo, Saab, Dassault Aviation.
- US stocks (in global ETFs): Lockheed Martin, RTX, Northrop Grumman, General Dynamics, L3Harris.
- Cybersecurity & tech: Some “Future of Defence” products also mix in drone, cyber and satellite technology.
- Concentration risk: In Europe ETFs, a single stock like Rheinmetall can account for more than 8–10 % — less diversification than in a global ETF.
Sector ETFs are not core investments. A defense ETF hinges on a handful of stocks and on political decisions (budgets, peace scenarios). Drawdowns of 20–30 % are normal in such thematic ETFs. They make sense as a satellite holding (5–10 % of your portfolio) but are unsuitable as a core investment. On top of that, many ESG/sustainability portfolios exclude defence — check this before you buy.
Single stock or ETF?
If you want targeted exposure to the European rearmament trend, a European defense ETF gives you broader coverage than a single Rheinmetall share — without the risk of picking the wrong company. If you’re convinced about one specific company, you can add a single stock alongside it. Both can be bought via savings plans at the major brokers.
FAQ — Defense ETF 2026
Which defense ETF is the best?
It depends on the focus you want. For pure Europe exposure, the WisdomTree Europe Defence (IE0002Y8CX98) is the cheapest option at a 0.40 % TER. If you want global diversification including US companies, go for the VanEck Defense or HANetf Future of Defence. All three are UCITS ETFs and tradable in Germany and Austria.
Can I set up a savings plan for a defense ETF?
Yes. The UCITS defense ETFs mentioned are eligible for savings plans at brokers such as Trade Republic and Scalable Capital, many of them free from €1 per execution. Check your broker’s current savings-plan list.
Are defense ETFs ethically justifiable?
That’s a personal decision. Supporters point to the defensive capability of democracies, while critics object to the weapons business model. In practice, defence stocks are excluded by many ESG funds — a sustainability-oriented portfolio rarely fits with a defense ETF.
How high is the risk?
High. This is a concentrated sector ETF with few, sometimes heavily weighted stocks. The price depends strongly on political budget decisions and can fluctuate significantly. It only makes sense as a satellite holding, not as a portfolio core.