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Highlights
ASX 200 sees strong gains in defence-related ETFs driven by rising global military expenditure
Global X DEFN, VanEck DFND, and BetaShares GDEF record notable performance amid global tensions
Government spending commitments and international pressure influence market movements
The defence sector within the ASX 200 has seen a significant rise in interest this year, led by a group of global defence exchange-traded funds. These funds, listed on the Australian Securities Exchange, have experienced a surge amid increasing global attention on defence and national security spending.
Among the notable performers is Global X Defence Tech ETF (ASX:DEFN), which has tracked companies involved in advanced military technologies. This fund aligns with the NASDAQ CTA Global Defense Technology Index, capturing exposure to firms adapting to next-generation warfare and strategic systems.
Another major contributor is VanEck Global Defence ETF (ASX:DFND), benchmarked to the MarketGrader Global Aerospace & Defense Leaders Index. It includes a diversified mix of global aerospace and defence firms involved in key contracts and projects across various continents.
The BetaShares Global Defence ETF (ASX:GDEF), which follows the FactSet Global Defense Select Index, has also seen elevated interest. This index is structured to reflect large and mid-cap defence-related corporations involved in the development and production of advanced systems, cyber capabilities, and aerospace equipment.
Surge in Activity Amid Political Developments
The rise in defence ETF activity follows increased international scrutiny over military spending, particularly from Western allies. Shifts in foreign policy and renewed global defence cooperation have catalysed a broad market reaction, leading to a sectoral rotation within ASX-listed funds.
The heightened inflows into these ETFs align with significant geopolitical events and policy developments, including new commitments by global powers to ramp up military readiness and technological capabilities. This movement was further fuelled by revised spending frameworks announced by several developed nations.
Capital Flows Reflect Broader Market Rotation
Since early this year, funds such as DEFN, DFND, and GDEF have attracted heightened trading volumes and capital movement. The concentration of assets in these ETFs marks one of the most notable thematic trends in the Australian exchange-traded fund market.
In the context of market-wide rebalancing, these products have served as a hedge against broad-based declines across traditional sectors. Several equity markets entered negative zones earlier in the year, triggering a reallocation of assets into segments perceived as insulated from broader economic cycles.
Strategic Spending Drives Market Performance
The shift in government priorities has also supported this trend. Domestically, a revised commitment to increasing national defence expenditure has contributed to optimism in defence-linked assets. While current plans aim to reach a specified level of defence allocation, external pressures could push national targets even higher.
Internationally, allied nations are discussing elevated defence benchmarks that surpass existing commitments. These ongoing developments are being closely monitored, especially ahead of major policy summits where further adjustments could be formalised.
As a result, ETFs focused on the defence sector remain prominent within the ASX 200, with increased allocation reflecting broader strategic imperatives and a redefined landscape.
