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The VanEck Defense Etf

Today we are not going to look at a single share, but take a look in a completely different direction. Into the defense sector.

Of course, the most well-known Etf in this sector, the VanEck Defense UCITS Etf, has caught my eye. Its annual performance is around 50%, and it has already posted a return of around 15% this year.

So today we want to take a closer look at what it really contains and whether an investment would be worthwhile, purely on the basis of the fundamental data.

$DFEN (-0,17%)

The fund volume currently amounts to €7.278 billion with annual costs of 0.55%. The Etf is an accumulating fund.

Company distribution:

Palantir Technologies 8% $PLTR (+1,71%)

RTX Corporation 8% $RTX (+0,23%)

Thales 7% $HO (+0,3%)

Leonardo- Finmeccania 7% $LDO (-0,1%)

Hanwha Aerospace Co Ltd ORD 6% $012450

Elbit Systems 6% $ESLT (-1,82%)

Saab 6% $SAAB B (-1,4%)

Curtiss Wright 5% $CW (+0,8%)

Leidos 4% $LDOS (-0,93%)

=57%

The remaining 43% is distributed in smaller shares among other companies, such as Planet Labs $PL (-2,73%) (approx. 2%) or Ondas $ONDS (-1,49%) (1%).

Country distribution:

USA 49%

South Korea 11%

Europe 30%

Israel 7%

Singapore 3%

1 Palantir Technologies (USA)

Conclusion: Palantir is not a normal stock

Palantir has developed impressively from a speculative bet to a fundamental force in the S&P 500. The company is more profitable than ever before: massive profit and sales growth meets software margins that are unparalleled in the industry.

But quality has its price on the stock market: this success has already been fully recognized and priced in by the market. With a current P/E ratio of almost 300, the share is extremely expensive and leaves little room for disappointment. Palantir is therefore a highly profitable, exceptional company, but its valuation already anticipates the perfection of the coming years.

This can also be clearly seen in the analysts' estimates: some say there is still plenty of room for improvement with a price target that is almost twice as high, while others say the fair value is half the current price.

That's why I personally can't really get on board with Palantir. The share as a whole is not a buy for me at the moment.

2. RTX corporation(USA)

Conclusion: RTX - The operational bulwark

RTX (formerly Raytheon) is the definition of stability and predictability in April 2026. With a gigantic order backlog of USD 268 billion, the business is secured for years to come. The company has solved the technical problems of the past and is now converting its dominant position in aerospace and defense into record-breaking cash flows.

While Palantir thrives on the AI fantasy, RTX delivers the physical reality: a moderate P/E ratio of around 36 compared to Palantir, rising dividends and a fundamental safety that is rare in the current market environment. It is not a speculative high-flyer, but a highly profitable basic investment for the security age.

However, perfection is priced in here with very high valuation premiums, so I am also skeptical.

3. thales (France)

Conclusion: Thales - the European "all-rounder"

Thales established itself as the technological backbone of European defense and digital infrastructure in April 2026. With a record order backlog of over EUR 53 billion, the company offers "visibility" for production that extends well beyond 2028.

- Financial performance: 2025 closed with sales of EUR 22.1 billion (+9% organic) and record cash flow. The target for 2026 is clearly defined: A jump in sales to up to EUR 23.6 billion with an improved EBIT margin of around 12.7 %.

- Strategic breadth: Unlike pure defense companies, Thales benefits from three engines simultaneously:

Defense: massive growth through the modernization of European armies.

Aerospace: The recovery in civil aviation is driving demand for avionics.

Cyber & Digital: Through the integration of Imperva, Thales is now one of the world's largest players in the field of data security - a market that is growing completely independently of military budgets.

With a Kgv of 29, we find the most favorably valued company to date.

4 Leonardo Finmenncania (Italy)

Conclusion: Leonardo - the efficiency champion

Leonardo is the "value tip" among the large defense stocks in April 2026. While competitors such as Rheinmetall or Palantir often struggle with extremely high valuations, Leonardo has done its homework in terms of profitability and is now benefiting massively from the European arms race.

- Financial turnaround: Leonardo has beaten all expectations with its figures for 2025. Sales rose to EUR 19.5 billion (+11%), while operating profit (EBITA) increased by a strong 18%. Particularly impressive: net debt was almost halved, giving the Group massive scope for new investments.

- Strategic focus: Under the new industrial plan (2026-2030), Leonardo is fully committed to digitalization and cyber security. With the "Michelangelo" project (an AI-supported air defense system), Leonardo occupies a lucrative niche in the NATO security architecture.

- Valuation as a trump card: Despite a share price rally of almost 190% since 2024, the share is still "reasonably" valued compared to the sector with a forward P/E ratio of around 27. It is significantly cheaper than many US rivals, although Leonardo has similar growth rates for incoming orders (+15%).

We have now briefly analyzed the 4 largest companies in this ETF, which account for around 30%.

How do you rate these companies? Please take a look at the other companies that have not been presented here.

And of course, are you invested in the etf or do you intend to be?

Would it be an investment case for you or do you think the defense sector is largely overvalued?

@Raketentoni
@Tenbagger2024
@Get_Rich_or_Die_Tryin
@Multibagger etc. ....

51 Comentários

Tenbagger2024@Tenbagger2024

I am not an ETF investor myself. But last year I always explicitly pointed out the high Palantir positions in the US defense ETFs to the USER. And rather recommended the European Defense ETF. I was probably a little right about Palantir. However, I now find the US Defense ETF attractive due to the new starting position. By the way, I think your approach of analyzing the large positions in the ETF individually is very good and also very advisable. Even if ETF investors tend to look for the less labor-intensive option. I expect good figures for RTX in May due to the high demand for Patriot. Incidentally, I see a P/E ratio of 122 in the chart for Palantir, which should actually be correct. So far, I have tended to be an opponent of Palantir due to its high valuation. However, if the share falls a little further, I will also consider buying in

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capital_captain_2693@capital_captain_2693

@Tenbagger2024 Thank you for your assessment. You're actually right about Palantir, I was still in 2025, when the Kgv was still almost 300.
I don't think the Etf is a bad addition and you reduce the risk a little if you diversify more broadly.

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Tenbagger2024@Tenbagger2024

@capital_captain_2693 I agree. As already written, the risk was a little too great for me due to the large palantir share. But if you want to invest in palantir anyway, it would be a good way of minimizing risk

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investment_sage_bpszl@investment_sage_bpszl

@Tenbagger2024 What other defense stocks do you have in your portfolio? But all the stocks presented here are trading at very high multiples. I'm not sure whether there's still so much room for improvement

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Tenbagger2024@Tenbagger2024

@investment_sage_bpszl I always had armor values in my company ideas. The last one was L3HARIES . I myself have more shovel suppliers for the defense industry in my portfolio.

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investment_sage_bpszl@investment_sage_bpszl

@Tenbagger2024 and what do you think of the values in the Defense Etf?
But the one you gave me is of course also a good option

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Tenbagger2024@Tenbagger2024

@investment_sage_bpszl I'm not quite the expert when it comes to ETFs. But the companies in the large positions are already robust

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capital_captain_2693@capital_captain_2693

@Tenbagger2024 I think so too. They're quite good, the only thing I've now clearly noticed again during my research is what @investment_sage_bpsl was already worried about. According to aktienfinder, they are all totally overvalued. But that's probably because it doesn't take into account the future with all the government orders and the entire backlog of orders.
Or am I wrong now?

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Tenbagger2024@Tenbagger2024

Armaments have already done well. Perhaps there will even be a small correction at the end of the war

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TradingHase@TradingHase

Great presentation. I like the fact that you take another look at the ETF's main stocks individually. 👍🏼

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capital_captain_2693@capital_captain_2693

@TradingHase Thank you very much! What is your assessment of the Etf

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TradingHase@TradingHase

@capital_captain_2693 I don't really know. I think that when it comes to armaments, the headlines are more important than the companies.

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pivot_code@pivot_code

Thanks for the contribution and the effort. I am actually invested and convinced. Hadn't realized that Palantir is now the largest position. (still at 4.9% at the end of 2025)

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Echsenkönig A.@Bezehgombjuderstimme

I am invested in both the and the Europe Defense. The Van Eck makes up just under 3% of my portfolio. I see these themed ETFs as a small gamble. Let's see how long it does well. So far, this is my best-performing etf 🙂

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Echsenkönig A.@Bezehgombjuderstimme

@Bezehgombjuderstimme Sorry, I made a mistake with the Future of Defense Etf from Van Eck 😂 But they are also almost all called the same thing

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capital_captain_2693@capital_captain_2693

@Bezehgombjuderstimme yes, I had also seen it as a small admixture

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Echsenkönig A.@Bezehgombjuderstimme

@capital_captain_2693 I think they are well set up with exciting titles. I think your analysis is good. In the end, let's not kid ourselves, they benefit when things go wrong and times are uncertain. At the moment, world events are so fragile that these stocks are benefiting massively. Of course, everyone has to decide for themselves whether to invest.

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

Not an investment for me, I think a lot of thematic and sector ETFs... distance.😅

But I think the approach with the largest individual positions and a corresponding short analysis is great.👌🏻

I only hold $EXENS and, if you want to count them, $NORBT in my portfolio.

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capital_captain_2693@capital_captain_2693

@Get_Rich_or_Die_Tryin understand. I am always cautious when it comes to ETFs.
But how would you generally classify the Etf? I think that a lot is already priced into the price, so I wanted to ask the community here what you think about it

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 I have a similar view. Palantir is a black box, but the valuation always bothers me. The others mentioned are also completely dependent on the state budget, and the fat long-term contracts are presumably already fully priced in. The backlog is well known.🤷🏼‍♂️

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 just read an analysis of drone shares. I once had $ONDS in my portfolio and sold it at a substantial profit. In the process, I came across this one $DRON. As a gamble without individual value risk, it would almost appeal to me 😅😏

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capital_captain_2693@capital_captain_2693

@Get_Rich_or_Die_Tryin Did you sell Ondas because of your new strategy or has something fundamentally changed with them?
In such an area I find themed ETFs interesting, your ETF contains all the companies that benefit most from the trend towards drones. And of course you avoid the risk of the very company you are invested in going bankrupt or something.
An Etf is certainly not a bad gamble here. You take out a good bit of risk.

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 I find the risk distribution with simultaneous concentration (there are only 33 stocks in the ETF) a charming solution, especially for this defense sector. Fundamentally, nothing has changed. I took my 150% profit and then revised my strategy, so I didn't get back in. However, I could certainly imagine using such a concentrated ETF. In any case, I won't be getting back into individual stocks in the drone sector.😉 Strategy and all that.👍🏻

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 Here is the article/analysis I wrote about:

https://finment.com/boerse-aktien/drohnen-aktien/top-drohnen-aktien/

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 Incidentally, my analyst verbally stoned me when I wanted to know his opinion and even remotely considered adding the ETF to my portfolio.😂 I'll probably do it anyway for the gambling instinct.🤷🏼‍♂️🤣

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capital_captain_2693@capital_captain_2693

@Get_Rich_or_Die_Tryin I read the article and it immediately made me want to buy such shares. I also see great potential in this area. I'm invested in Ondas myself. I believe in drones as modern warfare. And this market is set to grow enormously.
The Etf is basically really good for spreading the risk. However, I can see that the fund volume is still very small, so the spreads are certainly higher and it still seems a bit illiquid.

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capital_captain_2693@capital_captain_2693

@Get_Rich_or_Die_Tryin What else did your analyst complain about? 😁🤣. But I can probably guess if you've adapted it to your strategy.

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@capital_captain_2693 Sure, you're certainly right about the ETF. Nevertheless, for me it feels like a better option than betting solely on individual stocks in the sector. Even if the weighting is smaller, larger players are also represented, which I find quite a charming solution in this "waterfall" of far too little drone reference.

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Ver todas as 2 restantes respostas

capital_captain_2693@capital_captain_2693

@Raketentoni What does your Mr. Prompt say about the Etf?

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Raketentoni@Raketentoni

@capital_captain_2693 I'm on my way, I'll do it tomorrow afternoon

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capital_captain_2693@capital_captain_2693

@Raketentoni Without wanting to seem intrusive, I would also be really interested in your analysis of this

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Raketentoni@Raketentoni

@capital_captain_2693 Hi Captain! "Mr. Prompt" has started up the machines and pointed the scanner at your forum colleague's text.

First of all, my compliments to your colleague! This is a very clean, structured and fundamentally well-constructed summary. He has done his homework and not just allowed himself to be dazzled by the 50% annual performance, but also looked deep into the P/E valuations of the individual stocks.

Here is the unsparing "AOK analysis" of his text and how we assess it in the engine room:

1. the Palantir Paradox (The Distortion)
Your colleague got it absolutely right: Palantir is "not a normal stock". But this is precisely the biggest problem with this ETF. Palantir is a flawless software/AI company with SaaS margins (Software as a Service) and a P/E ratio beyond good and evil.
When you buy a defense ETF, you actually want to invest in heavy metal, missiles and tanks. The fact that Palantir is the largest position here at 8% massively distorts the volatility and overall valuation of the ETF. If the AI hype collapses tomorrow, Palantir will mercilessly drag this "defense" ETF down with it, even if armaments budgets are increased all over the world.

2. the valuation trap ("priced for perfection")
The colleague is skeptical about the high P/E ratios of RTX (36) and Thales (29). Quite rightly so! Traditional defense companies ("metal benders") have historically traded at P/E ratios of between 12 and 15 for decades because their business is extremely dependent on unpredictable government contracts. Currently, the market is paying double to triple the historical average for RTX and Co.
The market has already fully priced in the wave of armament (Ukraine conflict, NATO targets) for the next 10 years. Anyone entering the sector at these P/E ratios is buying at the absolute peak of the euphoria. If even one quarter disappoints, there will be bloody noses.

3. the dumbbell strategy check
Where does this ETF fit into our system?

Left side (The stoic anchor): Absolutely useless. The ETF's dividend yield is vanishingly low, volatility is high and the political risk (elections in the USA, peace negotiations) is unpredictable.

Right-hand side (the growth engine): This is where it fits at the moment as momentum is extremely strong (50% last year, 15% this year).

Mr. Prompt's ice-cold conclusion for the forum:
The fellow has provided a brilliant analysis, but his own skepticism at the end is the best guide. The defense sector is currently a pure momentum bet, no longer a relaxed basic investment. The shares have simply "grown up" and are extremely expensive.

For those who still want to play the defense sector, this ETF (despite the Palantir bias) is actually the safest choice to spread the individual stock risk given the horrendous valuations. However, anyone looking for genuine fundamentally favorable "value" will unfortunately be a few years late to the party in this sector in April 2026.

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capital_captain_2693@capital_captain_2693

@Raketentoni I see it the same way. I always find your Mr. prompt really good for the final analysis. With Keyence, for example, I was able to avoid the mistake of seeing the old Kgvs as relevant (you never stop learning 😉).
I'm keeping the ETF up to date, but won't be adding to it any further.

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Raketentoni@Raketentoni

@capital_captain_2693 It is also work to maintain something like this, well now comes the new project, real money depot managed by the AI

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capital_captain_2693@capital_captain_2693

@Raketentoni I am also curious

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investment_sage_bpszl@investment_sage_bpszl

@WarrenamBuffet @Klein-Anleger What do you think about this?

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SanSebastian@WarrenamBuffet

@investment_sage_bpszl Defense or armor is not my sector at all

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capital_captain_2693@capital_captain_2693

@WarrenamBuffet Wieso?

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investment_sage_bpszl@investment_sage_bpszl

@WarrenamBuffet and do you generally see the Etf as a sensible addition? I'm considering weighting it at around 5%.

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SanSebastian@WarrenamBuffet

@capital_captain_2693 I'm not interested at all and many stocks are already included in the ETFs anyway.

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SanSebastian@WarrenamBuffet

@investment_sage_bpszl if you think armor will outperform the global market over the next few years yes

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capital_captain_2693@capital_captain_2693

@WarrenamBuffet I have two custody accounts, one that is supposed to be the core, so it only contains the standard Etfs and one equity account. I find the Defense Etf interesting for my share portfolio, as I still have little in this area.

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Klein-Anleger@Klein-Anleger

@investment_sage_bpszl I'm generally not the ETF type ;) but defense is another matter. You're pretty dependent on the political/world situation - although armaments will probably experience a super cycle for the next few years, at least in Europe. So for me personally, I wouldn't invest - simply because an ETF doesn't fit my aggressive growth strategy. However, if you believe in the defense supercycle, then this ETF is certainly a solid choice...

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capital_captain_2693@capital_captain_2693

@Klein-Anleger I agree and the Etf is then a small admixture

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Traian@Traian

I made an investment in the Renk Group from Germany a few days ago. Very interesting share price, almost 0.8% dividend, looks fundamentally very good and has already landed orders for the Bundeswehr until 2028-2030.
You are welcome to take a look

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capital_captain_2693@capital_captain_2693

@savvy_investor_rbgqz I'll do it. I'll let you know then

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Traian@Traian

@capital_captain_2693 all right, thank you

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capital_captain_2693@capital_captain_2693

@Traian I'm sorry I've only just managed to reply, I was out all day yesterday.
What I particularly like is the profit growth, which is forecast at over 30% for the next few years. The Kgv also fits in with this. The PEG always fluctuates nicely around 1.
The dividend is a nice addition, but of course nothing earth-shattering.
The current order backlog is also really good. Renk is already fully booked for the next 4-5 years. Margins are also good.
Overall, I think it's a good investment, a nice tailwind due to the defense boom, but you have to be aware that the price could come back a bit if there is peace. But I don't think it's a bad addition to the portfolio.
I myself am still invested in $EXENS. If I wasn't in there, the Renk Group would also be something for me. But otherwise the cluster risk is becoming too great at the moment.

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Traian@Traian

@capital_captain_2693 the answer came quite quickly, thank you very much

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