The VanEck Defense UCITS ETF and VanEck Oil Services UCITS ETF both launched today (5 April) on the London Stock Exchange and Deutsche Börse Xetra.
Tracking the MarketVector Global Defense Industry index, the defence ETF attempts to exclude companies that generate sales with ‘controversial weapons’ or have “demonstrably failed” to comply with established standards.
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The index is comprised of a list of 31 companies that provide defence equipment, aerospace technology, unmanned aerial vehicles, communications, satellites, security, IT hardware and software, training and simulation, digital forensics and biometric identification.
It is classified as Article 6 under the EU SFDR, and the firm stated it was the only defence ETF in Europe.
VanEck noted that many Western European countries have said they will making “significant investments” into weapons, striving to meet NATO’s 2% target for spending that they have consistently missed in the past.
“Companies in the security and arms industries could benefit from this development in the coming years,” Martijn Rozemuller, CEO at VanEck Europe, said.
“Due to the Russian invasion of Ukraine, tensions in Asia, and global uncertainty, security and defence are back on investors’ minds after being shunned for several years,” he added.
The oil ETF follows the MarketVector US Listed Oil Services 10% Capped index, tracking the 25 largest and most liquid companies in the sector, with a cap preventing any firms representing more than 10% of the index.
Rozemuller argued the emphasis on “security of energy supply and independence” the US has shown in recent months presents a strong investment case for the ETF.
He added: “Due to higher commodity prices and supply shortages, investments in fossil fuels are making a comeback.
“Several countries have reconsidered their energy mix, placing increased emphasis back on traditional fossil fuels.”
The defence ETF and oil ETF have total expense ratios of 0.55% and 0.35% respectively.
