Defense ETFs Are Soaring and SHLD Is Leading the Charge

Geopolitical tensions, surging military budgets and a renewed arms race—particularly in Europe—have lit a fire under global defense stocks. The Trump administration’s tough talk on NATO and demands for increased European defense spending have helped push countries like Germany to dramatically ramp up their military outlays. Meanwhile, the U.S. remains the world’s biggest defense spender, with no signs of slowing down.

Against this backdrop, defense ETFs have delivered blockbuster returns. The Select STOXX Europe Aerospace & Defense ETF (EUAD) is up a staggering 59% year to date, making it the best-performing nonleveraged U.S.-listed ETF of the year. 

The fund has benefited from its concentrated exposure to European names like Rheinmetall and BAE Systems, which have surged as governments on that continent scramble to rearm.

But EUAD isn’t the only defense-themed ETF climbing the leaderboard.

SHLD: A New Breakout ETF Star

The Global X Defense Tech ETF (SHLD) has quietly become a breakout star, with a 47% return year to date, making it the third-best-performing nonleveraged ETF of 2025 through May 19. It’s also seeing massive investor interest: $909 million of year-to-date inflows have helped it swell to $2 billion in assets under management.

Launched in September 2023, SHLD takes a different approach than legacy defense ETFs. It tracks the Global X Defense Tech Index, which targets companies at the intersection of defense and technology. That includes names developing and deploying cybersecurity systems, artificial intelligence, big data platforms, robotics, next-gen fuel systems and advanced military hardware.

This tech-forward tilt gives SHLD a more growth-oriented profile than traditional defense ETFs like the iShares U.S. Aerospace & Defense ETF (ITA), which leans heavily on legacy contractors.

Palantir Technologies Inc. (PLTR), for example—the data analytics firm known for its deep ties to U.S. intelligence and defense agencies—is the top holding in SHLD at 11%. Palantir shares have soared 70% this year as demand surges for its AI-powered defense and commercial platforms (the stock has also driven gains in leveraged ETFs like GraniteShares 2x Long PLTR Daily ETF (PTIR) and Direxion Daily PLTR Bull 2x Shares (PLTU), which are among the year’s best performers).

SHLD's Global Scope

Rheinmetall, the German arms and automotive manufacturer, is SHLD’s second-largest holding at 10.5%, a reflection of the ETF’s international exposure. In total, U.S. companies make up roughly half of the portfolio, with the rest spread across Europe and other regions.

That global scope has served SHLD well. With defense stocks rising not just in the U.S. but also across Europe and beyond, the fund has been able to capitalize on multiple tailwinds.

As the world enters what looks like a new era of military modernization and geopolitical competition, defense ETFs like SHLD are becoming increasingly attractive to investors looking to gain exposure to both global rearmament and next-generation defense technology.