Select STOXX Europe Aerospace & Defense ETF

EUAD

Market cap $1.2B

Select STOXX Europe Aerospace & Defense ETF (EUAD) offers concentrated exposure to European defense firms benefiting from rising geopolitical tensions and increased EU/NATO defense budgets. EUAD's top holdings possess strong economic moats, diversified military-commercial revenue streams, and new growth drivers like counter-drones and satellite communications. Relative and absolute valuation suggest EUAD is 16–18% undervalued, with a Fair Value estimate around $48 versus the current ~$41 price.

European governments are pushing defense budgets higher than at any point since the Cold War, and three exchange-traded funds offer distinct ways to ride the spending cycle: the iShares U.S.

Select STOXX Europe Aerospace & Defense ETF (NASDAQ:EUAD) was the cleanest way to own European defense stocks from a U.S.

European equities have rallied in a way that few investors expected a year ago. Germany's decision to loosen its debt brake, the launch of the EU's ReArm Europe program, and a wave of higher defense budgets across NATO have all shifted expectations about the continent's fiscal direction.

Designed to provide broad exposure to the Industrials - Aerospace & Defense segment of the equity market, the Select STOXX Europe Aerospace & Defense ETF (EUAD) is a passively managed exchange traded fund launched on October 22, 2024.

Major U.S. defense stocks failed to outperform during the Iran conflict, tracking the S&P 500's negative performance instead. In this article, I explore several reasons for their apparent failure to serve as a meaningful hedge during wartime.

Europe's defense spending surge has turned a quiet corner of the ETF market into one of the most-watched trades of the past 18 months.

Key Takeaways: Defense ETFs now hold $42 billion in assets with $9 billion in inflows this year amid rising geopolitical tensions. Eight out of nine new defense ETF launches since 2025 have been global or international offerings.

The defense industry is transforming into one of the most interesting areas of the market, particularly for investors seeking a stable growth alternative to higher-beta sectors like technology.

I recommend buying the Select STOXX Europe Aerospace & Defense ETF for its superior risk-reward profile versus U.S. peers. EUAD benefits from Europe's largest defense investment cycle since the Cold War, with military spending rising toward 2% of GDP in 2025. EUAD trades at a 30x P/E, offering a 20% upside if it re-rates to XAR's 36x multiple, reflecting potential for valuation catch-up.