HANetf has launched the Future of Defence Screened UCITS ETF to offer exposure to NATO-based defence and cyber-defence firms while meeting SFDR Article 8 criteria.
The ETF invests in companies expected to benefit from the long-term increase in defence spending across NATO but excludes those involved in controversial weapons and limits constituents to those headquartered in NATO member states. These countries are bound by shared defence commitments and established arms export controls.
This is HANetf’s second Article 8 defence ETF, following the Future of European Defence Screened UCITS ETF, which was the first of its kind in Europe. The firm said the new launch responds to investor demand for defence exposure with more stringent screening.
The ETF enters the market amid growing NATO budgets, following the alliance’s agreement to raise defence spending to 5% of GDP by 2035.
In 2024, NATO members spent a record $2.7trn on defence. Analysts expect further expansion of defence contracts in response to geopolitical instability, including the war in Ukraine and ongoing conflict in the Middle East.
HANetf now offers four defence-focused ETFs: Future of Defence UCITS ETF and Future of Defence Indo-Pacific ex-China UCITS ETF, both classified as Article 6, and Future of European Defence Screened UCITS ETF and the new Future of Defence Screened UCITS ETF under Article 8.
The flagship Future of Defence UCITS ETF has reached $3.13bn in assets under management.
Hector McNeil, co-founder and co-chief executive of HANetf, said: “Investors increasingly recognise that security and sustainability are not opposing forces – they are interlinked. A well-equipped and responsibly governed defence sector is essential to maintaining peace, stability and the rule of law.
“With a more focus, screened defence ETF, we aim to give investors confidence that their capital supports NATO defence capabilities while adhering to robust responsibility standards. Importantly, these enhancements also make the ETF more accessible to investors in regions where exposure to certain defence-related activities has previously been restricted from a legal and regulatory perspective, widening the opportunity to participate in the growth of defence.”
Future of Defence Screened UCITS ETF is listed on Xetra and Borsa Italiana, with listings on the London Stock Exchange and SIX to follow. The fund has a total expense ratio of 0.49%.