Direxion Daily Aerospace & Defense Bull 3X Shares

DFEN

Market cap $305M

On the surface, recent news that the Trump administration has been collaborating with Russia to devise a new peace plan for Ukraine potentially offers hope. Steve Witkoff, serving as Trump's envoy, is spearheading the drafting of the agreement and has held extensive talks with Russian envoy Kirill Dmitriev, according to an Axios report.

Top Performing Leveraged/Inverse ETFs Last Week These were last week's top performing leveraged and inverse ETFs. Note that because of leverage, these kinds of funds can move quickly.

Global security concerns are driving massive inflows into defense sector ETFs. FactSet data showing a 573% surge in sector ETFs in 2025.

Global geopolitical risks continue to place an onus on nations to bolster spending to enhance their defensive capabilities. In turn, this continues to feed into strength for the aerospace and defense (A&D) sector, which creates plenty of opportunities for traders.

The top annual ETF performers share a common trait, the firm behind them and investors who are ready to trade no matter which direction the market goes.

AI spending garners plenty of attention. But it's got a long way to go to get anywhere near global defense expenditures.

Direxion Daily Aerospace & Defense Bull 3X Shares is rated a strong buy due to robust defense spending trends and geopolitical momentum. DFEN benefits from surging European demand for US armaments, NATO's 5% defense spending target, and multi-year contracts favoring US defense companies. Recent geopolitical tensions and shifting rhetoric between the US and Russia further fuel short-term momentum for DFEN.

European nations are recognizing they need to commit more capital to defense. Therefore,related spending is surging around the world.

Defense stocks are overvalued with high forward P/Es and a strong war premium, making volatility risk significant, especially for leveraged ETFs like DFEN. DFEN's daily 3x leverage amplifies volatility drag, making it unsuitable for long-term holding. But beware, this does not necessarily mean the end of the bullish phase for the aerospace and defense sector.

While most investors may arguably be focused on productive ventures such as cloud computing and artificial intelligence, it's an objective reality that the robust but controversial defense sector has been an outperformer. Since the beginning of the year, the benchmark Dow Jones U.S. Select Aerospace & Defense Index has gained nearly 35%.