PROVIDING INVESTMENT IN EUROPEAN DEFENCE

With the iShares Europe Defence UCITS ETF.

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The defence sector is emerging as a focus area for investors globally, as spending in defence reached $2.46 trillion in 2024, an average of 1.9% of GDP1, amid ongoing geopolitical shifts, policy uncertainty and market volatility.

In Europe, defence spending rose by nearly 12%, with national governments increasing defence budgets1 and the European Commission set to mobilise up to €800bn in defence funding2 in response to evolving security challenges. 

This creates a gap in European portfolios that are underexposed to the sector, presenting an opportunity to investors. 

We provide a complete revenue-based and specialised exposure to European defence for investors to express more granular views, as they look to capture opportunities and mitigate risks within the defence sector.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
12%

Increase in defence spending in Europe in 2024.1
€800B

Additional defence expenditure enabled within the European Union’s Readiness 2030 plan, by 2030.2
~65:30

Ratio of defence to aerospace revenue in holdings of DFEU.

INVESTING IN EUROPEAN DEFENCE WITH iSHARES

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GROWTH OPPORTUNITY IN EUROPE

We see an investment opportunity in European defence, as country budgets increased and supported by major fiscal packages like the EU’s Readiness 2030 (EUR 800 billion goal).
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SPECIALISED DEFENCE EXPOSURE

Selectivity and granularity are key. DFEU offers Europe-only exposures resulting in investment across European defence strategies, excluding Controversial Weapons and UNGC violators.3,4
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BALANCING EUROPEAN PORTFOLIOS

Leveraging our portfolio construction capabilities, we can help European investors with their portfolio allocations to capture the opportunities and mitigate risks related to investing in defence.

INTRODUCING iSHARES EUROPE DEFENCE
01.

GRANULAR APPROACH TO DEFENCE ALLOCATION

• At least 65% of the index deriving most of their revenues from defence.5
• Diversification across market caps, including security names with flexibility to ‘future-proof’ the exposure.
02.

DATA-LED STOCK SELECTION WITH SCREENS

• Access a strategy built on market leading ISS dataset for enhanced scrutiny on companies.
• Excluding those not meeting the required revenue thresholds and other exclusions like Controversial Weapons and UNGC violators.6
03.

FOCUSED EXPOSURE

• Europe-only exposures that result in investment across European defence strategies.
• European defence companies that supply European countries.
• Companies at the forefront of innovation and household names.

EXPLORE RELATED PRODUCTS

Building blocks to tailor your exposure to global aerospace and defence, and digital security.

1 Source: International Institute for Strategic Studies (IISS) as of February 2025.

2 Source: European Commission, White Paper for European Defence – Readiness 2030, as of March 2025.

3 Not involved in Controversial Weapons activities, as identified by ISS ESG. The following weapons are considered controversial: anti-personnel mines, biological weapons, chemical weapons, cluster munitions, ISS ESG’s Controversial Weapons Research is designed to identify all companies in a corporate structure that have control over the relevant business activities, i.e., all immediate parent companies up to the ultimate parent. Companies identified as ‘Red’ are excluded. If there is not data for a company, that names is excluded.

4 Companies are assessed against their adherence to international norms on human rights, labor standards, environmental protection and anti-corruption established in the UN Global Compact and the OECD Guidelines. Companies identified as ‘Red’ are excluded. ISS ESG identifies companies as ‘Red’, if they fail to respect established norms and where the issue remains unaddressed. If there is no data for a company, that name is excluded.

5 Traditional defence indices have provided higher exposure to aerospace.

6 Military Equipment and Services Revenue is based on ISS ESG maximum revenue share factor data. This dataset identifies the maximum amount of revenue estimated or company reported to be derived from involvement in a business activity as a percentage of the issuer’s total annual revenue.