Europe’s defense strategy is shifting fast. With former U.S. President Donald Trump demanding higher NATO spending and reducing support for Ukraine, the EU is stepping up.
European Commission President Ursula von der Leyen has unveiled an €800 billion plan for advanced weaponry, AI, and infrastructure. Russia’s aggression continues, while Ukraine still needs assistance. Beyond defense, this funding could boost drone manufacturing, cybersecurity, and more.
With U.S.-Europe ties uncertain, the continent’s defense sector is an increasingly attractive target for investors. Areas like hypersonic missile technology, satellite networks, and critical mineral supply chains hold significant potential.
There is growing investor interest in ETFs that provide exposure to the defense sector, especially those offering high or pure exposure to European defense companies.
Here’s a list to explore:
ETFs with Exposure to European Defense Stocks
European Defense ETFs for U.S. investors
Most ETF investors are now familiar with the most popular U.S.-listed defense ETFs, such as the iShares U.S. Aerospace & Defense ETF (NYSE:ITA), Invesco Aerospace & Defense ETF (NYSE:PPA), SPDR® S&P Aerospace & Defense ETF (NYSE:XAR), and Global X Defense Tech ETF (NYSE:SHLD).
However, ITA, PPA, and XAR are heavily tilted toward U.S. companies (if not purely).
SHLD on the other hand has solid exposure to German companies (8.4%), British (7.2%), French (6.7%), Italian (5.4%) and Swedish (3.5%) companies with big names like Rheinmetall (ETR:RHMG) AG, BAE Systems (LON:BAES) PLC, Thales (EPA:TCFP) SA, Leonardo SPA, and Saab AB.
Select STOXX® Europe Aerospace & Defense ETF (EUAD)
Meanwhile, the Select STOXX Europe Aerospace & Defense ETF (NYSE:EUAD) tracks the STOXX® Europe Total Market Aerospace & Defense Index, providing investors with targeted exposure to European companies that generate at least 50% of their revenue from the manufacture, service, supply, and distribution of aeronautical equipment, components, hardware, software, and electronic systems.
The fund also includes companies producing equipment, systems, infrastructure, and electronics that directly support civil and military defense efforts.
EUAD is highly concentrated, holding only 13 stocks as of the latest data. Its top holdings include Airbus Group (EPA:AIR) SE (22%), Safran SA (OTC:SAFRY) ADR (20%), Rolls-Royce (LON:RR) Holdings ADR (13%), Rheinmetall AG ADR (13%), BAE Systems PLC ADR (13%), and Thales SA ADR (6%). Other notable holdings are Leonardo SpA (4%), MTU Aero Engines ADR (3%), Saab AB (3%), Hensoldt AG (1%), QinetiQ Group PLC (1%), Babcock International Group (LON:BAB) (1%), and Chemring (LON:CHG) Group PLC ADR (0.4%).
Since its launch in October last year, EUAD has amassed $200 million in AUM and has recently gained increased attention online as a way to gain targeted exposure to European defense companies.
EUAD trades on the Cboe Exchange and has an expense ratio of 0.5%.
There are other defense ETFs like the Themes Transatlantic Defense ETF (NATO) and the Pacer Solactive Whitney Future of Warfare ETF (FOWF) to explore, but investors should examine their allocations to assess their exposure to European defense companies.
European Defense ETFs for European Investors
VanEck Defense ETF A USD (LON:DFNS)
The DFEN ETF by VanEck offers European investors a way to gain exposure to the defense industry, with a strong European allocation. It is also the largest defense-focused ETF in terms of assets under management (AUM), having amassed $3.2 billion since its inception nearly two years ago (March 31, 2025).
The fund tracks the MarketVector™ Global Defense Industry Index (MVDEFTR), providing exposure to leading defense technology companies, large-scale cybersecurity firms, and defense-related service providers.
With 28 holdings, some of its largest positions are in European defense companies, including Thales SA, Leonardo SPA, and Saab AB, contributing to a total European stock exposure of 32%.
DFNS trades on multiple European exchanges and has an expense ratio of 0.55%.
HANetf ICAV - Future of Defence UCITS ETF (ETR:ASWC)
The Future of Defence UCITS ETF (NATO) by HanETF, with its standout ticker, has already amassed over $1.55 billion in net assets and has seen over $720 million in net inflows this year alone.
The ETF tracks the EQM Future of Defence Index, offering exposure to companies generating revenue from NATO and NATO+ ally defense and cyber defense spending.
As of March 6, 2025, the fund holds 60 stocks, with 35% exposure to European countries, including Rheinmetall AG, BAE Systems PLC, Thales SA, Safran SA, Leonardo SPA, and Saab AB.
NATO also trades on multiple European exchanges and has an expense ratio of 0.49%.
iShares Global Aerospace & Defence UCITS ETF USD (EPA:DFND)
A third option is the iShares Global Aerospace & Defence UCITS ETF (DFND), which has $334 million in AUM as of March 6, 2025. The fund tracks the S&P Developed BMI Select Aerospace & Defence 35/20 Capped Index, providing exposure to developed market equity securities within the Global Industry Classification Standard (GICS) Aerospace & Defence industry.
Its exposure includes manufacturers of civil and military aerospace and defense equipment, parts, and products, as well as defense electronics and space equipment.
The benchmark index caps the weights of the largest companies on a monthly basis to ensure diversification.
The fund holds 58 stocks, with over 30% exposure to European defense companies, including Airbus Group, Safran SA, Rolls-Royce Holdings PLC, BAE Systems PLC, Rheinmetall AG, and Thales SA.
DFND also trades on multiple European exchanges and has an expense ratio of 0.35%.