1Settimana·

🧠 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 (-0,12%)
) 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 🙌

2 Commenti

Ricola@Roccola601

1Settimana

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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Brokémon@Brokemon

1Settimana

@Roccola601 Thank you for your detailed answer :)
A lot is certainly already priced in, I agree.
I would rather see the ETF as a satellite in my portfolio (with FSTE All world as a stable core) to ideally get a few extra percent out of it. Especially because I think that in the next 4-5 years the political tensions will not ease but worsen (keywords: Russia, Taiwan, Hong Kong, Gaza,...) - I hope I am wrong!

I know it's pure speculation, as with any sector ETF. But at the moment this is the sector that A) is underrepresented in my portfolio and B) will get a lot of attention.

Edit: thanks for the comparison with the clean energy sector - I'll read up on that now :)

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