Investors jump into defence ETFs as nations raise spending

Yasmine Raso

Senior Journalist

17 April 2026

In a direct response to global governments raising defence budgets and ‘stockpiling’ arms, investors have visibly piled into defence exchange traded funds (ETFs) and sent the last year’s funds under management (FUM) skyrocketing.

According to new commentary from Betashares Investment Strategist, Tom Wickenden, Australian investors have followed – if not overtaken – a “broader global shift”, pouring more than $550 million into defence-themed ETFs in the past 12 months, representing a 396 per cent increase.

Wickenden noted this trend comes as the Federal Government announced a further $53 billion injection to its defence budget over the next decade, in support of its newly-released National Defence Strategy and Integrated Investment Program.

“The Albanese government’s $53 billion commitment to defence spending reflects a growing trend of nations materially increasing defence budgets in response to heightened geopolitical tensions,” he said.

“This is not a story confined to one country. Defence spending is rising across allied economies as governments rebuild stockpiles, modernise military capability and respond to a more contested geopolitical environment.

“That is creating a more durable backdrop for the sector, with major global defence contractors reporting order books that grew by more than $100 billion over the past year, supporting a strong pipeline of future revenues and earnings.”

According to data sourced by Betashares from Bloomberg, global defence ETFs have seen approximately US$20 billion in net inflows since the beginning of the year – which accounts for around 19 per cent of total FUM.

Global defence ETF FUM has also recorded a 133 per cent increase in the last 12 months, rising from US$46 billion to US$107 billion.

“Retail, advised, and institutional investors are all adding defence allocations. The appeal is twofold,” Wickenden said.

“Short-term upside from governments raising defence budget targets and re-stockpiling munitions, as well as long-term structural exposure acting as a hedge to an era of growing geopolitical tension and shifting world order.

“This is already being reflected in investor behaviour. Globally, defence exposures have seen a sharp acceleration in demand, with around US$20 billion in inflows this year alone and total assets more than doubling over the past 12 months.

“The trend is also evident locally, where Australian defence ETF exposures have remained highly topical for investors and continued to attract inflows.”