VanEck has launched Europe’s first ETFs offering exposure to the defence and upstream oil sectors, ETF Stream can reveal.
The VanEck Defense UCITS ETF (DFNS) and VanEck Oil Services UCITS ETF (OIHV) are listed on the London Stock Exchange and Deutsche Boerse with total expense ratios (TERs) of 0.55% and 0.35%, respectively.
DFNS tracks the MarketVector Global Defense Industry index of 31 companies involved in defence equipment, aerospace technology, communications, satellites, security and IT hardware and software, unmanned aircraft, training and simulation and biometric identification.
Companies must have a market cap of $1bn, a three-month average daily trading volume (ADTV) of $1m, 250,000 shares traded per month and at least 50% revenue exposure to military or defence industries to be included. Constituents are capped at a maximum weight of 8%.
Recognising the sector is contentious, ADTV excludes companies involved in controversial weapons or those that have “demonstrably failed” to comply with established standards.
Martijn Rozemuller (pictured), CEO of VanEck Europe, commented: “Since the start of the war in Ukraine, views on security and defence policy have started shifting, as the need for security policy has become more obvious.
“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.”
Meanwhile, OIHV tracks the MarketVector US Listed Oil Services 10% Capped index of the 25 largest US-listed companies involved in oil and gas equipment, services and drilling.
Constituents are capped at 10% weightings and must have a market cap of $150m, a three-month ADTV of $1m, trade 250,000 shares a month and derive at least 50% of their revenues from the underlying subthemes to be included.
“Fossil fuels have become a matter of national security in many countries and the importance of the security of energy supply and independence has become apparent.
“Due to higher commodity prices and supply shortages, investments in fossil fuels are making a comeback,” Rozemuller added. “Several countries have reconsidered their energy mix, placing increased emphasis back on traditional fossil fuels.”
The new arrivals continue a busy launch period for VanEck following the arrival of its nuclear and uranium ETF in February, ETF Stream revealed, and Europe’s first bionic healthcare ETF last December.