WisdomTree Europe Defense Fund

WDEF

Market cap $40.3M

One of the most persistent themes this year has been global defense. Historically, it has been an industry that tends to shine when geopolitics drives the macro narrative.

One of this year's most noticeable industry-level themes has been increased defense and national security spending. Importantly, that trend is expanding beyond the usual suspects of the U.S., China, and Russia.

By Christopher Gannatti, CFA, Global Head of Research; and Samuel Rines, Macro Strategist, Model Portfolios Key Takeaways In 2025, Europe accelerated its defense revival with Rheinmetall opening the continent's largest shell factory, a critical step toward meeting NATO's artillery needs amid the ongoing war in Ukraine.

Europe is an epicenter of ramped-up defense spending. Many countries in the region are also NATO members pledging to increase the percentages of GDP allocated to national security in significant fashion in the coming years.

Defense industry giants like Lockheed (LMT) and Raytheon (RTX) retain top spots, but innovative firms and European players are gaining ground. Boeing (BA) has fallen in defense revenue rankings, while newcomers like GE Aerospace (GE), SpaceX, and Palantir show strong growth potential. To capture defense innovation, I recommend ETFs such as SHLD, EUAD, and WDEF, with SHLD as a top pick for technology-driven exposure.

Active investors have likely gotten the memo that international stocks are throttling U.S. counterparts in 2025. As of Oct. 6, the MSCI ACWI ex USA IMI Index, which combines developed and emerging markets equities, is higher by 29.2% year-to-date compared to a gain of "just" 15.6% for the S&P 500.

European defense spending is surging, making targeted ETFs like SHLD, EUAD, and WDEF compelling. SHLD stands out for its tech innovation-focused approach. Between them, EUAD and WDEF offer the best access to Europe's defense sector.

By Christopher Gannatti, CFA, Global Head of Research; and Samuel Rines, Macro Strategist, Model Portfolios Key Takeaways Despite the recent sell-off in key European defense stocks like Rheinmetall and Saab, the underlying driver, Europe's Readiness 2030 defense surge, remains a powerful, long-term structural trend for investors.

Last year, countries around the world, led by the U.S., spent $2.7 trillion on defense. With European nations committing to increased defense expenditures, it's unlikely that figure will decline soon.

WisdomTree Investments has added yet another fund to its suite, this time a strategy providing exposure to European defense firms. The WisdomTree Europe Defense Fund (WDEF) charges a 45 basis point fee to track the WisdomTree Europe Defense Index.