Three reasons to consider a European defence ETF
Adjusting to a new reality
Marketing communication
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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
European equity market performance2 at the start of 2025 has reversed a longtime trend of it lagging US stocks. In the first quarter, investors rotated to Europe from the US in the UCITS ETF market, adding €26.7bn to the former and just €9.0bn to the latter2.
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 about one-third of the S&P 500 index in the US4.
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 ambitious defence package (of up to €800 billion5) to modernise armed forces and to reduce dependencies on the US.
We are taking decisive action with increased defence spending and important investments in European defence industrial capabilities. We must buy more European -European Commission President Ursula von der Leyen
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.
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.
Amundi has launched an ETF to give investors the option to gain access to this key sector6. Introducing the:
We are a European company with a global footprint. With €272bn 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.
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 diversi-fication2 that would be difficult and expensive to achieve through buying individual stocks.
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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.
Marketing Communication
The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movement in the markets or because we are not able to pay you.
Beside the risks included in the risk indicator, other risks may affect the Sub-Fund’s performance. For further information, please refer to the prospectus of the fund.
Additional risks: Market liquidity risk could amplify the variation of product performances.
These products do not include any protection from future market performance so you could lose some or all of your investment. Beside the risks included in the risk indicator, other risks may affect the Sub-Fund’s performance. Please refer to the prospectus for the funds.
ETF Name
ISIN
Risk indicator
SFDR* Article
Amundi Stoxx Europe Defense UCITS ETF Acc
LU3038520774
5
6
The risk indicator assumes you keep the product for 5 years.
*SFDR: “Sustainable Finance Disclosure Regulation” –2019/2088/EU. EU regulation that requires, among other things, the classification of financial products according to their ESG intensity. A fund is referred to as “Article 8” if it promotes ESG characteristics in tandem with other financial objectives, or “Article 9” when it has a sustainable investment objective. Any fund that does not comply with the two previous categories is an “Article 6” fund.
Risk of the loss of invested capital. Investors may not get back the original amount invested and may lose all of their investment.
Risk associated with the markets to which the ETF is exposed. The price and value of investments are linked to the liquidity risk of the components. Investments can go up as well as down.
Risk associated with the volatility of the securities/currencies composing the underlying index.
The fund investment objective may only be partially reached.
Information on Amundi’s responsible investing can be found on amundietf.com and amundi.com.
The investment decision must take into account all the characteristics and objectives of the Fund, as described in the relevant Prospectus. When investing in an ETF, it’s important to carefully review the fund’s prospectus. As with any investment, it’s advisable to assess your investment goals, risk tolerance and seek professional advice before making investment decisions.
PLEASE NOTE THAT CAPITAL IS AT RISK. YOUR CAPITAL IS FULLY AT RISK AND YOU MAY NOT GET BACK THE AMOUNT ORIGINALLY INVESTED.
1 Investment involves risks. For more information, please refer to the Risk section below.
2 Source: Amundi, Morningstar, as of end-March 2025. Past performance is not a reliable indicator of future performance.
3 Diversification does not guarantee a profit or protect against a loss.
4 Source: Stoxx, S&P Global. Data as of 28 February 2025. For more information regarding the index methodology, please refer to index provider.
5 Source: European Commission, as of 18 March 2025.
6 Source: Stoxx. Data as of 28 Feb 2025. For more information regarding the index, please refer to index provider website.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 about all the costs of investing in the fund, please refer to its Key Information Document (KID).
9 Source: Amundi, ETC included, as of March 2025
10 Source: ETFGI, February 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.
Information on Amundi’s responsible investing can be found on amundietf.com and amundi.com. The investment decision must take into account all the characteristics and objectives of the Fund, as described in the relevant Prospectus.
It is important for potential investors to evaluate the risks described below and in the fund’s Key Information Document (“KID”) and prospectus available on our website www.amundietf.com.
KNOWING YOUR RISK
CAPITAL AT RISK - ETFs are tracking instruments. Their risk profile is similar to a direct investment in the underlying index. Investors’ capital is fully at risk and investors may not get back the amount originally invested.
REPLICATION RISK - The fund’s objectives might not be reached due to unexpected events on the underlying markets which will impact the index calculation and the efficient fund replication.
COUNTERPARTY RISK - Investors are exposed to risks resulting from the use of an OTC swap (over-the-counter) or securities lending with the respective counterparty(-ies). Counterparty(-ies) are credit institution(s) whose name(s) can be found on the fund’s website amundietf.com. In line with the UCITS guidelines, the exposure to the counterparty cannot exceed 10% of the total assets of the fund.
CURRENCY RISK – An ETF may be exposed to currency risk if the ETF is denominated in a currency different to that of the underlying index securities it is tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.
LIQUIDITY RISK – There is a risk associated with the markets to which the ETF is exposed. The price and the value of investments are linked to the liquidity risk of the underlying index components. Investments can go up or down. In addition, on the secondary market liquidity is provided by registered market makers on the respective stock exchange where the ETF is listed. On exchange, liquidity may be limited as a result of a suspension in the underlying market represented by the underlying index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, or other market-maker systems; or an abnormal trading situation or event.
CONCENTRATION RISK – Thematic ETFs select stocks or bonds for their portfolio from the original benchmark index. Where selection rules are extensive, it can lead to a more concentrated portfolio where risk is spread over fewer stocks than the original benchmark.
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