Jasmine Birtles
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The Best Defence ETFs for UK Investors in 2025
Ruby Layram
16th May 2025
Investing in the defence sector involves investing in companies that operate in the defence and aerospace industries. It can be a lucrative venture during times of global conflict and uncertainty, which is why many investors have been quietly adding defence assets to their portfolios since the beginning of 2024.
One of the easiest ways to invest in the defence sector is to invest via a defence ETF. In this guide, we will take a look at what defence ETFs are and reveal the best funds to consider in May 2025.
What is a Defence ETF?
A Defence ETF is an exchange-traded fund that provides investors with exposure to a diversified portfolio of companies operating in the defence and aerospace industries. These companies may be involved in manufacturing military equipment, providing defence-related services, or developing technologies used in national security.
By investing in a Defence ETF, you gain access to multiple defence-related companies through a single investment, which can help spread risk compared to investing in individual stocks. These ETFs are traded on stock exchanges, making them accessible and liquid investment options.
The Best Defence ETFs to Buy in 2025
Now, let’s look at the best defence ETFs to consider if you’re a UK investor in 2025.
1. VanEck Defence UCITS ETF (LSE: DFNS)
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Focus: Global defence and aerospace companies
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1-Year Return: Roughly 56%
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Expense Ratio: 0.55%
DFNS is an absolute star performer right now. It gives you exposure to the biggest names in defence—think Lockheed Martin, Northrop Grumman, and the like. It’s popular with UK investors too, with growing inflows on platforms like JustETF and Stake. Basically, if you want to ride the global wave of defence spending, this one’s a strong contender.
2. HANetf Future of Defence UCITS ETF
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Focus: European defence companies
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1-Year Return: Around 32.6%
With Europe stepping up its defence game, this ETF is well-positioned. It includes key players like BAE Systems and Thales, and it’s tailored for investors looking for a regional angle. Platforms like Interactive Investor and IG are seeing increased demand for this one.
3. WisdomTree Europe Defence UCITS ETF
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Focus: European defence sector
This is the first European defence-focused ETF, which makes it a bit of a trailblazer. As Europe ramps up domestic arms production (partly to reduce reliance on the US), this ETF has caught the attention of savvy investors—and the media.
If you like the idea of backing the continent’s self-sufficiency push, this is a solid choice.
You might like: The best European ETFs for UK Investors
4. iShares U.S. Aerospace & Defence ETF (NYSE: ITA)
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Focus: U.S. aerospace and defence giants
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1-Year Return: Roughly 16%
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Expense Ratio: 0.40%
If you want in on the big U.S. names, ITA is your go-to. It’s been a staple in defence investing for years and offers diversification outside Europe. Big guns like Boeing and Raytheon are included. It’s available via Stake and other platforms, making it accessible for UK investors.
5. SPDR S&P Aerospace & Defence ETF (NYSE: XAR)
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Focus: U.S. aerospace and defence sector
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1-Year Return: Around 15.3%
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Expense Ratio: 0.35%
XAR is a bit different from ITA. It uses a modified equal-weight approach, which means smaller players get more of a look-in. If you’re after a more balanced portfolio within the defence world, this could be your ticket.
How to Invest in Defence ETFs From the UK
Thinking of diving in? Here’s how to do it:
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Choose a brokerage platform: Go with a trusted UK investment platform like Hargreaves Lansdown, AJ Bell, Interactive Investor, or eToro. Stake is also great for accessing U.S.-listed ETFs.
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Open your account: A Stocks & Shares ISA is a tax-efficient way to invest, but you can also use a general investment account.
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Fund your account: Transfer some money from your bank account and you’re ready to roll.
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Find your ETF: Search using the ticker symbol (e.g., DFNS for VanEck Defense). Double-check you’re picking the right one, especially if it’s U.S.-listed.
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Place your order: Choose how much you want to invest. You can often buy fractional shares if you don’t want to splash the full amount.
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Keep an eye on things: Check in occasionally and see how your investment is doing. And remember—markets go up and down. It’s all part of the game.
How to Invest in Defece ETFs from the UK
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Choose a Brokerage Platform: Select a UK-based platform that offers access to international ETFs, such as Invest Engine, Interactive Investor, or eToro.
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Open an Investment Account: Set up a Stocks & Shares ISA or a general investment account, depending on your tax preferences and investment goals.
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Fund Your Account: Deposit funds via bank transfer or debit card to prepare for investment.
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Select Your ETF: Use the ETF’s ticker symbol (e.g., DFNS for VanEck Defence UCITS ETF) to locate it on your chosen platform.
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Place Your Order: Decide on the amount you wish to invest and execute the trade.
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Monitor Your Investment: Regularly review your portfolio to ensure it aligns with your investment goals and adjust as necessary.
Investing in defence ETFs is a great way to build a diverse portfolio in 2025. However, it’s important to stay on top of global trends and be prepared for a bit of volatility in this sector!
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies, are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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