Sektory a témata
Defense and Aerospace as an Investment: Resilience, Growth, and the Ethical Question
Key takeaways
- Defense ETFs include manufacturers of weapons, aircraft, cyber defense systems, and satellites.
- The sector has historically shown lower correlation with the economic cycle thanks to long-term government contracts.
- Geopolitics drives spending upward, but direction can change rapidly when conflicts end.
- Ethical restrictions may block the investment for some funds or for ESG investors.
- Sector ETFs are suitable as a satellite, not as a replacement for a core portfolio.
The defense and aerospace industry has returned to the center of investor attention: European governments are increasing defense budgets, civil aviation is recovering from the pandemic, and technological races in hypersonics and drones are opening new markets.
What the sector includes
Defense and aerospace covers a very diverse range of companies — from fighter jet and missile manufacturers to suppliers of electronic systems, cybersecurity for militaries, satellite communications, through to civil aircraft and engine manufacturers. Large players are typically diversified conglomerates with divisions in both segments.
UCITS ETFs for the defense sector
UCITS funds tracking defense/aerospace indices are available on the market. When selecting, check:
- Geographic composition — US defense companies dominate, but the European defense boom is adding weight to European companies.
- ESG filters — some funds exclude manufacturers of controversial weapons, others do not.
- Turnover and liquidity — see ETF selection guide.
Sector risks
The key risk is political — government contracts can change with a change of government or the end of a conflict. The sector is also heavily regulated and export licenses can be revoked. Concentration of contracts among a small number of companies adds specific risk. Civil aviation, by contrast, is cyclical and dependent on consumer demand for travel.
Who and how much
The defense sector makes sense as a satellite position of 5–8% for an investor convinced of persistently higher defense spending in Europe and NATO. The core portfolio is still better built on broad indices, as described in the All World vs. S&P 500 comparison.
FAQ
Are defense ETFs available in Europe?
Yes, UCITS funds exist for defense and aerospace. They differ in composition — from purely military industry to a mix of defense and civil aviation technology. Always check ESG restrictions.
Is the defense industry cyclical?
Less so than consumer goods — long-term government contracts give it more stable revenues. But political changes and the end of conflicts can reduce spending quickly.
How are returns from defense ETFs taxed in the Czech Republic?
The same as any other ETF. Dividends are subject to a 15% tax; capital gains are exempt after three years of holding. More in the article on ETF taxes.