General Description

Europe is undergoing a structural rearmament cycle, driven by rising geopolitical tensions, aging military stockpiles, and NATO's renewed 2% of GDP defense spending commitment. The re-election of Donald Trump has added urgency, pushing EU policymakers to front-load spending, now projected to reach nearly 5% of the bloc's GDP in aggregate. The Euro Defense Share Basket offers targeted exposure to nine listed defense-focused companies, including Rheinmetall, Leonardo, Thales, and Hensoldt, with defense revenues ranging from 17% to 90%. These firms operate across critical capabilities such as armored systems, aerospace, cybersecurity, and shipbuilding. The basket's adjusted weighting ensures diversified exposure across countries and defense sub-segments, with listings in Paris, Frankfurt, and Milan. The Russia-Ukraine conflict remains the primary catalyst, pushing European governments to rebuild military readiness, ensuring robust order books and long-term margin tailwinds for defense firms. Over 5 years, the basket generated an annualized return of 38.5% against the Euro Stoxx 50's returns of 13.6%.