Select STOXX Europe Aerospace & Defense ETF

EUAD

Market cap $1.38B

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.

The Select STOXX Europe Aerospace & Defense ETF (EUAD) is increasingly attractive amid heightened geopolitical tensions and European rearmament priorities. EUAD's fundamentals and valuation are reasonable, with a 25.94 PE ratio and 2.31 price/sales, supporting a buy rating despite recent price surges. Europe's urgent need to reduce reliance on U.S. security guarantees and counter both Russian and American unpredictability underpins the investment thesis.

Trump's $1.5T military budget and rising global tensions could lift defense ETFs and spill over into cybersecurity, AI, manufacturing and space ETFs.

A German contractor, Italian aerospace name, and British defense company.

The US Department of War rules the skies. This aerial military supremacy has enforced the Trump Doctrine that has ended 8 international wars and kept US military casualties at zero.