Global X has introduced an exchange-traded fund (ETF) designed to provide investors with access to some of the largest aerospace and defence companies across the world in response to increasing military budgets.
The Global X Defence Tech ETF, trading under the Australian Securities Exchange (ASX) code DTEC, focuses on companies that generate over half of their revenue from defence technologies.
Among its largest holdings are major manufacturers such as Lockheed Martin, RTX Corp and Northrop Grumman. The ETF has an annual management fee of 0.50 basis points and is now available on the ASX.
Global X investment strategist Billy Leung pointed out the launch of DTEC comes at a time when heightened geopolitical tensions are driving increased defence spending globally.
“As the global landscape evolves, modern defence planning has shifted towards safeguarding nations through a combination of technology-driven innovations and essential defence infrastructure to enhance protection, intelligence and security,” Leung noted.
“DTEC offers investors access to the sectors leading this transformation, with global defence spending rising at an annualised rate of 4.3 per cent over the past 40 years. We expect this trend to continue amid further geopolitical uncertainty, which is a testament to the sector’s resilience even during economic downturns.”
According to Global X, DTEC can serve as a satellite holding for investors seeking exposure to the growing defence technology sector or as a way to diversify from traditional sectors and broader technology indices.
“DTEC offers growth due to its differentiated exposure across various sectors, including industrials, cybersecurity, AI and augmented reality. Unlike many civilian markets, defence revenues are closely tied to military needs,” Leung added.
“This gives the defence sector a level of resilience and less correlation with general economic cycles, making DTEC an attractive option for investors seeking capital growth.”
The fund has already been available in the United States under the ticker code SHLD, where it has amassed over US$500 million in net assets in less than a year.
With the launch of DTEC, Global X now offers 41 ETFs locally following the release of a growth-oriented fund last month.
