Is Defense a good area for investment just now?

Russia has sent drones over NATO (Poland) territory. This has caused some concern amongst the West.

Oana Lungescu, a fellow at the Royal United Services Institute think tank and a former NATO spokesperson, said NATO Secretary-General Mark Rutte "has said that NATO needs a five-fold increase in air and missile defense capabilities, so that’s an urgent priority. It’s also important that all NATO countries clarify their national legislation about downing aircraft entering their airspace."

Defense stocks and shares had increased in price over the last 8 months due to the Ukraine/Russian war, but this latest incident has shown that more spending on defense (from drones) is immediately required.

ETFs

It is possible to buy defense ETFs. EU defense ETFs have, not surprisingly, risen in this last month.

DEFV has shown the steepest gain so far this month.

I already have shares in BAE Systems BAE and Rolls Royce RR. Other defense companies are Thales, Leonardo, Rheinmetall, SAAB and Babcock, amongst others.

Of these, Rheinmetall is perhaps the best bet for me.

The price of defense ETFs and defense companies should peak and then drop and level off. Buying in now would just be at an elevated price.

I have Rheinmetall and DEFV on my watch list and will be tempted to buy on the dip - if there is one in a week or so.

P.S. If you wanted to day trade, you could always buy 3EUD WisdomTree STOXX Europe Aerospace & Defence 3x Daily Leveraged. This is obviously extremely volatile but these sort of x3 Short and x3 Long ETFs can be useful if you react quickly to the news such as Russia attacking Poland or Israel attacking Hamas leaders in Qatar!

3EUD - 20% rise from 7th to 12th Sept. 2025

 Steve

Note: Defense and Nuclear power contracts are two areas where governments spend a LOT of their tax payer's hard-earned money. Many of the companies involved in these industries are $multi-billion private companies funded by large investment companies. Thus the identities of the private investors backing them is hard to discover. Of course, none of this would be vulnerable to insider investing or cause one company to be chosen in preference to another ;-)

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This is not investment advice - please do your own research. These stocks can be risky and volatile. Only invest what you can afford to lose.

 

P.S. The semiconductor Taiwanese company TSMC share price has risen almost 7% this week...