BNP Paribas Asset Management (BNPP AM) is set to become the latest issuer to launch a European defence ETF as asset managers look to tap investor appetite to capture the beneficiaries of military spending across the continent.
According to a public register, the BNP Paribas Easy Bloomberg Europe Defense UCITS ETF has been approved by Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF).
Lorraine Sereyjol-Garros, global head of development for ETFs and index funds at BNPP AM told ETF Stream, “We want to answer our client demand by offering a new investment solution that intends to capture a secular theme, supported by policy tailwinds and structural trends.”
European defence ETFs have enjoyed a strong start to life since entering the market little over a month ago. WisdomTree gained the first mover advantage in the space, with the WisdomTree Europe Defence UCITS ETF (WDEF) gathering $1bn assets under management (AUM) in just five weeks.
Europe's largest asset manager, Amundi, also recently received approval for a European defence strategy. The Amundi Stoxx Europe Defense UCITS ETF will track the STOXX Europe Total Market Defense Capped index, which has returned 40% so far in 2025, as at 14 April.
Last week, white-label provider HANetf unveiled the Future of European Defence UCITS ETF (ARMY) listed on Deutsche Boerse and Euronext Paris, coinciding with WisdomTree providing an amplified iteration of its WDEF ETF with the launch of the WisdomTree STOXX Europe Aerospace & Defence 3x Daily Leveraged ETP (3EDF).
ETF Stream understands VanEck is also considering launching a European iteration of its highly successful defence ETF, which has amassed $4.2bn since becoming the first product of its kind to list in Europe in March 2023.
Issuers' rush to provide ETF exposure to European defence names follows a convergence of spending plans by policymakers, including European Commission President Ursula von der Leyen pledging €800bn to a 'rearmament plan' spanning the next four years, while German Chancellor Friedrich Merz eyed a $200bn military budget increase and Denmark recently announced a $5.5bn defence spending package.
However, as with the once poster child of thematic investing - clean energy - between 2020 and 2021, much of the launch activity looking to capture European defence has occurred after the stocks comprising most related indices have enjoyed an unprecedented run. Rheinmetall, the largest constituent of WDEF at launch, has rallied 2,345% over the trailing five years.
As for any theme or sector being captured by ETFs, timing is key. Issuers being early to an exposure may mean prolonged periods of flat returns for investors. But ETF launches coinciding with media traction often result in investors buying into a theme after plenty of future earnings have been baked into, or inflate, valuations.
