VanEck Unveils Australia’s First Global Defense ETF – InvestorDaily

VanEck has confirmed it is launching the VanEck Global Defence ETF (DFND) on the ASX this week, which will provide exposure to a portfolio of defence companies across sectors including aerospace, communications, security software and training.

The firm said the launch comes at a time when rising geopolitical risks are becoming an increasing consideration in portfolio construction, with investors assessing how the changing global security environment is impacting government spending and ultimately capital deployment.

For example, a recent report by the Stockholm International Peace Research Institute (SIPRI) found that global military spending rose by 7 percent to $2.43 trillion, the largest annual increase since 2009.

VanEck said this reflects a heightened interest in national security amid a “deterioration” in international peacekeeping, with the industry expected to grow by nearly 40 percent to $3.1 trillion by 2030.

Last week, the company confirmed for the first time the imminent launch of the new ETF, noting that the product offers investors an opportunity not currently offered by the ASX.

“Unfortunately, the world has changed since the days of celebrating the peace dividend. Where countries once extolled the economic benefits of reduced defense spending, they are now increasing military spending,” Arian Neiron, CEO and managing director of VanEck Asia Pacific, noted Monday.

“Investors are adjusting to the likely rise in prices in the coming years.”

Neiron added that DFND is a continuation of the VanEck initiative, which was the first in Europe to launch a global defence fund, which is now being implemented locally in response to high demand.

“Global defense companies benefit from a unique investment complex. Demand is driven by structural growth drivers, and cash flows are typically backed by long-term government mandates. This can be a strategic allocation for investors, providing a different form of capital risk management.”

Neiron stressed that the arms industry has always been a pioneer in the field of technological development and progress.

“This sector has seen a greater emphasis on research and development, leading to a number of innovations that have found their way into mainstream applications such as GPS navigation, epinephrine auto-injectors (better known as EpiPens), the internet and super glue.”

In June, the company announced the hiring of four new people in its Australian office, a move aimed at increasing its market share among financial advisers and institutional investors.

At the time, Neiron said, “Demand is growing as advisors become more familiar with the opportunities our investment strategies offer.”

“But there is still plenty of room for growth. ETFs currently make up just a fraction of the total $4.75 trillion of funds under management in Australia.

“Our market-leading ETF strategies have the potential to capture a much larger piece of the pie, and our new hires will help us strengthen our efforts to achieve that growth.”