Opinion sought Defense ETFs as a strategic portfolio component DFNS

Hello everyone,

I have been looking more closely at allocating to thematic sector ETFs for some time now - particularly with regard to long-term geopolitical trends, government spending cycles and strategic diversification.

The VanEck Defense UCITS ETF ($DFEN (+0,13 %)
) is now available with over 5 bn € AUM one of the largest and fastest growing defense ETFs in Europe.

I personally find the construct - physical replication, ESG screening (no exposure to controversial weapons), broad geographical diversification (USA, EU, Israel, South Korea) - quite interesting. TER of 0.55% is reasonable.

💡 My view - Pro:

Defense spending is rising structurally in many industrialized countries → long-term tailwind
Hardly any correlation with traditional consumer or tech sectors → Diversification
Many holdings benefit not only from military business, but also from aerospace, cybersecurity and dual-use technologies

⚖️ But there are also cons:

Political risks (export bans, ESG pressure from institutional investors)
Lack of transparency of some sources of income (civil/military not always clearly separable)
Possible overvaluation after the strong run since 2023?

📊 Question for you:

➡️ How do you rate the defense sector in general - as a strategic component of a diversified long-term portfolio?

➡️ Do you think $DFEN is a sensible vehicle - or too niche / cyclical?

I'm looking forward to hearing your views - especially from those who deal with sector ETFs, geopolitical trends or ethical issues themselves.

Thank you 🙌

Ricola@Roccola601

4Sem.

Hello :) So for me this is out of the question at this point, in my opinion it is already too late to play this theme with a larger weighting as an ETF - so it could still boost performance pro-cyclically for a while, but then I would miss the right exit time for this tactical play. But a lot has already been priced into this sector and I wouldn't feel comfortable with it. In my opinion, you should always be positioned BEFOREhand on such topics and be able to justify this thesis well. Otherwise you end up with the Global Clean Energy hydrogen debacle in your portfolio, where the ETF went hand in hand with the overvaluation of the hydrogen stalls.

Just my assessment - and maybe you are doing everything right and there is some kind of armor super cycle. :)

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🧠 Opinion sought: Defense ETFs as a strategic portfolio component? ($DFNS)