Why Defense ETFs Are Among the Year’s Top Performers
- For investors, defense is one of the most closely watched corners of the market in 2025.
- Many see the industry as a long-term growth play.
This Memorial Day, we honor those who gave their lives in service to the United States. As we remember their sacrifice, it's also worth noting how the defense industry, shaped by decades of military history and policy, continues to evolve on the global stage.
For investors, defense is one of the most closely watched corners of the market in 2025.
Besides its role in national and global security and foreign policy, the U.S. defense industry has been a cornerstone of the U.S. economy and its importance has taken on new dimensions in recent years. Geopolitical tensions are rising, global military budgets are climbing and emerging technologies like artificial intelligence are reshaping the battlefield.
The U.S. is also the world's biggest weapons exporter, responsible for 43% of global weapons sales, according to the Stockholm International Peace Research Institute.
That’s translated into renewed attention from investors on defense and aerospace ETFs.
EUAD, SHLD Among Top Performers
Two of the top-five, best-performing, nonleveraged ETFs so far in 2025 are defense-focused: The STOXX Europe Aerospace & Defense ETF (EUAD) is up 62%, while the Global X Defense Tech ETF (SHLD) has gained 47%. Both funds have benefited from tailwinds like NATO military spending, a renewed focus on European rearmament and demand for next-gen tech by militaries.
Even when you expand the field to leveraged products, defense remains a standout theme. Two ETFs tied to Palantir Technologies Inc. (PLTR), a data analytics firm with deep government and military contracts, are among the top-10 leveraged ETF performers this year: The GraniteShares 2x Long PLTR Daily ETF (PTIR) and the Direxion Daily PLTR Bull 2x Shares (PLTU) are both up around 87% year to date.
As defense budgets continue rising in the U.S. and abroad, many see the industry as a long-term growth play, especially as it intersects with themes like cybersecurity and AI.
