Global X Defense Tech ETF

SHLD

Market cap $7.42B

Major combat operations in Iran, coordinated with Israel, are intensifying risk-off sentiment across global markets, impacting equities, crypto, energy, and logistics. Oil companies like Exxon Mobil (XOM) and Chevron (CVX) may benefit from higher oil prices, but gains depend on supply disruptions and infrastructure damage.

Global X Defense Tech ETF is rated Buy at $74, capturing the transatlantic defense supercycle, driven by unprecedented European rearmament. SHLD offers diversified exposure to U.S. and European defense contractors, outperforming ITA with a 77% one-year return and superior risk-adjusted metrics. Despite a 40x trailing earnings multiple and a 0.50% expense ratio, SHLD's multi-year contract backlogs and structural demand justify its premium.

Todd Rosenbluth, head of research at VettaFi, joined Nate Geraci on this week's ETF Prime to discuss five emerging flow trends as the ETF industry tracks toward $1.8 trillion in inflows for 2026. The industry pulled in roughly $150 billion in January, building on the record $1.5 trillion gathered in 2025.

Defense contractors are entering a new era as key pillars of the industrial base, driven by robust, less cyclical demand and government-backed capacity expansion. Book-to-bill ratios and backlogs at LHX, RTX, NOC, and GD signal strong forward revenue visibility, with RTX posting a standout 1.56x ratio and $270B backlog.

The aerospace and defense sector is experiencing parallel growth in commercial and defense markets, with revenues projected to rise from $800B in 2025 to $1.25T by the mid-2030s. Commercial aerospace faces supply chain disruptions and regulatory hurdles, while aftermarket sales and space-related opportunities drive near-term revenue growth.

After a record $1.5 trillion year for the ETF industry in 2025, demand has not slowed down in January. Indeed, as of January 21, ETFs had already gathered $103 billion of new money.

Global X Defense Tech ETF targets high-margin, software-defined warfare, emphasizing cybersecurity, robotics, and advanced military systems over traditional heavy industry. SHLD surged 73% in 2025, outperforming peers, and remains positioned to benefit from a $3.6 trillion global defense spending supercycle by 2030. Strict index criteria, diversified holdings, and momentum in AI-driven defense tech underpin SHLD's growth thesis, despite a 0.5% expense ratio and modest dividend yield.

SHLD and other defense ETFs are in focus as Q4 earnings loom, with rising global military spending set to validate record contract-driven growth.

Geopolitical tensions over Greenland highlight the region's strategic value for security, resources, and trade, impacting U.S. and European defense equities. U.S. defense ETFs like XAR and blended funds like SHLD remain attractive, given ongoing European reliance on U.S. defense products despite rising EU self-sufficiency. European defense stocks may see sentiment-driven price support, but near-term opportunities are limited by current industry capacity and budget mechanisms.

SHLD hits a new 52-week high, up 106% from its low, as defense tech gains momentum amid rising global instability.