Select STOXX Europe Aerospace & Defense ETF·Financial Services
The fund invests at least 80% of its total assets in the component securities of the index. The index is designed to track the performance of a portfolio of the common stock of companies based in Europe whose primary business is the manufacture, service, supply and distribution of civil and military aerospace equipment, systems and technology, and civil and military defense and protective services equipment, technology, systems and services. It is non-diversified.
Financial Services
Asset Management
2024-10-22
0.71

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.

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.

VettaFi explores how defense ETFs have expanded beyond traditional contractors into international, space, and drone investment opportunities.

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.