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DFND — iShares Aerospace & Defence: an ETF breakdown for the defence sector
Key takeaways
- DFND tracks the S&P Global Aerospace & Defence index and provides access to manufacturers of military technology and aircraft.
- Accumulating fund with Irish domicile, TER of around 0.35% per year — verify the current figure on justETF.
- Defence companies are highly dependent on government contracts and geopolitics — this causes above-average volatility.
- ESG investors typically exclude the fund due to the ethical nature of the sector.
- DFND is a satellite position, not a core — combine it with a diversified global ETF.
What is DFND and what you are buying
DFND (iShares Global Aerospace & Defence UCITS ETF) replicates the S&P Global Aerospace & Defence index. The fund invests in manufacturers of military technology, aircraft, missiles, cyber defence systems and suppliers of military systems worldwide — with a clear dominance of US companies (over 60% of the index).
TER and technical specification
Costs are approximately 0.35% per year — verify the current TER on justETF. The fund is accumulating (Acc) with Irish domicile. Irish domicile is advantageous for European investors in terms of withholding tax on US dividends, as explained in why UCITS ETFs with Irish domicile.
Index composition
Among the largest positions you will find Lockheed Martin, RTX (Raytheon), Boeing, Northrop Grumman and BAE Systems. The sector is heavily dependent on government contracts — defence budgets directly determine company revenues. During geopolitical tension, defence stocks typically outperform the market significantly.
Risks you need to know
- Regulatory risk: changes in export licences or arms embargoes affect the entire sector.
- Ethical dimension: some investors exclude defence companies on ESG grounds — ESG-screened funds typically exclude these stocks.
- Geopolitical dependency: reduced tensions or cuts to defence budgets can significantly slow the sector.
- US concentration: the dollar exchange rate strongly influences returns in euros.
Who DFND is for and its portfolio role
DFND is a satellite ETF for investors who:
- believe in long-term growth of defence spending in a context of geopolitical instability,
- have no ESG restrictions in their investment mandate,
- want sector exposure without having to select individual stocks.
As a portfolio core, DFND is insufficient — high sector concentration makes that impossible. Combine it with a broad global index, for example in a 90% core / 10% satellite ratio. What a stock index actually is is explained in what is a stock index and why investors build on it.
FAQ
What is the difference between DFND and JEDI?
DFND covers the entire aerospace and defence sector. JEDI focuses specifically on space innovations. They overlap in companies such as Lockheed Martin or Northrop Grumman, but have different emphases.
Is DFND suitable for ESG investors?
Generally not. Defence and weapons companies are typically excluded from ESG portfolios. If the ethical dimension of investing matters to you, look for ETFs with an explicit ESG screen.
How does DFND react to geopolitical events?
Historically the defence sector tends to rise during escalation of international conflicts or increases in defence budgets, and falls when tensions ease. Predicting these moves is very difficult.