Why you might consider a European defence ETF
Marketing Communication
Major geopolitical shocks such as Russia’s invasion of Ukraine and President Donald Trump’s radical overhaul of US foreign policy have reshaped the global system.
These shifts have prompted a rethink of priorities among European states that can no longer rely on the US as a dependable security partner. As a result, huge investment is set to be channelled into homegrown defensive solutions in Europe.
Although this new reality is defined by risks, it could also present opportunities for investors.1
Here are three reasons you might consider a European defence ETF.
1 Investment involves risks. For more information, please refer to the risk section below.
European equity market performance2 through much of 2025 reversed a longtime trend of it lagging US stocks. In the first nine months of the year, investors in the UCITS ETF market added €53.2bn to European equities and €29.0bn to US equities.
Additionally, compared to the US, European equities remain relatively cheap, while also paying out a higher dividend yield2.
Another potential strength of European equities is diversification3. The STOXX 600 index, for example, is not overly exposed to any single sector, whereas tech accounts for more than one-third of the MSCI US index4 in the US4.
Amundi ETF, Morningstar, data as at end-September 2025
2 Source: Amundi, Morningstar, as of end-June 2025. Past performance is not a reliable indicator of future performance3 Diversification does not guarantee a profit or protect against a loss.4 Source: MSCI. Data as of end-September 2025. For more information regarding the index methodology, please refer to index provider website.
Trump has upended the international order by threatening to withdraw support from the North Atlantic Treaty Organisation (NATO) unless members spend more on defence.
The US is the largest provider of armed forces and equipment to NATO. With US security support in doubt, European countries are scrambling to become more self-reliant amid Russia’s war in Ukraine and as China continues to invest in its armed forces.
To this end, the EU has unveiled an ambitious defence package (of up to €800 billion5) to modernise armed forces and to reduce dependencies on the US.
Source: Stockholm International Peace Research Institute, NATO. Data as of end-2024. Information given for illustrative purposes only, may change without prior notice. GDP stands for Gross Domestic Product.
Europe is placing increasing emphasis on reducing its reliance on foreign powers for defence. But the same is true for other sectors. This shift is set to create long-term investment opportunities in the industrials, infrastructure, energy and technology sectors.
5 Source: European Commission, as of 18 March 2025.
The STOXX Europe Total Market Defense Capped Index6 offers access to numerous market-leading companies across Europe in the defence and aerospace sector that produce everything from aircraft engines to drones, radars, armoured vehicles, and more.
With a more coherent security policy, fiscal stimulus and government support, European defence stocks could offer investors a generational opportunity for potential long-term growth1.
Source: STOXX. Data as of end-September 2025. For more information regarding the index methodology, please refer to the index provider’s website
The STOXX Europe Total Market Defense Capped Index6 is designed to capture the performance of companies classified in the aerospace and defence sector, which have proven revenue in defence activities.
1 Investment involves risks. For more information, please refer to the risk section below.6 For more information regarding the index methodology, please refer to index provider website www.stoxx.com
Amundi has launched an ETF to give investors the option to gain access to this key sector6. Introducing the: Amundi STOXX Europe Defense UCITS ETF
The ETF replicates the STOXX Europe Total Market Defense Capped Index6. It is the most competitively priced7 European defence UCITS ETF, with management fees of just 0.35%8.
ETFs are a collection of assets that can be bought and sold on a stock exchange much like an individual asset. Also, they could enable investors to achieve a level of diversification2 that would be difficult and expensive to achieve through buying individual stocks.
We are a European company with a global footprint. With €300bn of ETF assets under management9, we are the number one European ETF provider10. Our range of 300+ ready-to-use ETFs provides a compelling variety of cost-competitive strategies11.
7 Source: Amundi - April 2025, Amundi Stoxx Europe Defense UCITS ETF is the cheapest ETF with this specific exposure (Europe Defense) within the European UCITS ETF. Information given given for indicative purposes only, may change without prior notice.8 Management fees refer to the management fees and other administrative or operating costs of the fund. For more information regarding all the costs supported by the fund, please refer to its Key Information Document (KID). Transaction cost and commissions may occur when trading ETF.
9 Source: Amundi, ETC included, as of end-August 202510 Source: ETFGI, June 2025, Amundi is the leading European headquartered ETF provider within the European market.11 Amundi’s ETF range average expense ratio is lower than the European market: 19 bps vs 22 bps, source ETFGI, as of February 2025.
