Global X extends defence tech ETF to Aussie investors

Patrick Buncsi

10 October 2024

Exchange traded fund (ETF) specialist Global X has opened its Defence Tech ETF (DTEC) to Australian investors after the fund’s successful launch in the US last year.

The ETF offers investors targeted exposure to global defence technology innovators, including companies at the forefront of developing artificial intelligence (AI), drones and cybersecurity tech.

DTEC aims to track the performance of defence technology sectors by focusing on innovations in security, defence systems and hardware – including robotics, fuel systems, and aircrafts specialised for defence applications – that enhance national safety.

The fund will seek out companies positioned to benefit from the increased adoption and utilisation of these defence technologies.

“DTEC offers growth due to its differentiated exposure across various sectors, including industrials, cybersecurity, AI and augmented reality,” said Global X investment strategist, Billy Leung.

For Leung, the DTCE fund offers strong growth opportunities for investors, with less correlation to general economic cycles.

“What is key here is that unlike many civilian markets defence revenues are closely tied to military needs. This gives the defence sector a level of resilience and less correlation with general economic cycles, positioning DTEC as an attractive option for investors seeking capital growth,” Leung said.

The fund has been available in the US since September 2023 under the ticker code SHLD and counts more than US$500 million in net assets.

Among the fund’s top holdings are Lockheed Martin, RTX, Northrop Grumman, and Palantir Technologies.

The DETC attracts a management fee of 0.50% per annum.

According to Global X, the launch of the DTEC comes at a “critical juncture” for investors as heightened national security concerns spark increased global defence spending.

“As the global landscape evolves, modern defence planning has shifted towards safeguarding nations through a combination of technology-driven innovations and essential defence infrastructure to enhance protection, intelligence and security,” Leung said.

Citing Stockholm International Peace Research Institute and US Department of State figures, Leung notes that global defence spending has grown at an annualised rate of 4.3% over the past 40 years.

“We expect this trend to continue amid further geopolitical uncertainty, which is a testament to the sector’s resilience even during economic downturns,” Leung said.