Supported in part by a growing U.S. defense budget, legacy aerospace and defense ETFs are performing admirably. A trio of those funds each have more than doubled over the past three years. That’s great for investors engaged with those products. However, a new era of defense spending and product evolution is here. It’s an appropriate time for savvy investors to consider next-generation approaches to defense investing. The WisdomTree Global Defense Fund (WDGF) is an example of an ETF that answers that bell.
WDGF debuted last September as one of three defense ETFs in WisdomTree’s roster of funds offering refreshed approaches to this industry. Living up to its global billing, WDGF follows the WisdomTree Global Defense Index. That index includes domestic equities as well as Asian and European fare, confirming investors are getting a global approach to an industry that merits it. The index’s use of regional and revenue metrics bolsters that point. That ensures credible defense names and truly global exposure.
It’s Time to Think Differently About Defense Investing
When it comes to global defense expenditures, the “three kings” are the U.S., China and the Russia. However, from the defense spending perspective, the latter two are largely uninvestable to market participants in this country. That leaves investors to choose from stocks and ETFs that are heavily dependent on the U.S. government.
As noted above, the returns suggest that approach has worked in recent years. Still, it misses out on new, potentially compelling opportunities. WDGF fills that void.
“In Europe, where large-cap technology ecosystems are limited, defense companies are often at the forefront of advanced engineering and R&D. In Asia, particularly Japan and South Korea, electronic components and precision interception technologies are global leaders,” according to WisdomTree research.
