Jasmine Birtles
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The Best Defence ETFs for UK Investors in 2026
Ruby Layram
10th Aug 2026
Defence spending is having a moment. NATO members have agreed to ramp up military budgets to 5% of GDP by 2035, and the UK’s own Defence Investment Plan is set to push spending to £80 billion by 2029. For investors, that’s translated into one of 2026’s biggest themes- defence and aerospace ETFs have been pulling in record amounts of money, and several new funds have launched to meet the demand.
If you’ve been wondering how to get exposure to this trend without picking individual defence stocks (which can be pricier and riskier one by one), an ETF – a fund that trades on the stock exchange like a share, but holds a basket of companies – can be a simple, low-cost way in. Here’s what’s driving the trend and five defence ETFs UK beginners might want to look into, plus what to watch out for.
* Some of the links in this article are affiliate or partner links. If you choose to purchase through them, MoneyMagpie may receive a commission at no additional cost to you. We only recommend products and services we believe offer value to our readers, and our editorial content is always produced independently.
Why Defence ETFs Are Trending Right Now
In 2026, NATO members formally committed to spending 5% of GDP on defence-related activity by 2035, split between 3.5% on core military spending and 1.5% on wider areas like cyber defence and infrastructure. European governments have been raising budgets in response to ongoing geopolitical tensions, and that’s fed straight through into rising share prices for aerospace and defence companies – and strong inflows into the ETFs that track them.
For UK investors, this isn’t just a niche theme. Defence and aerospace names like BAE Systems sit within the FTSE 100, so many of you may already have some exposure through a general UK tracker fund. A dedicated defence ETF simply concentrates that exposure.
What to Know Before You Buy a Defence ETF
Before diving into the list, a quick jargon-buster and a word of caution:
OCF (Ongoing Charges Figure): the annual fee a fund charges you, shown as a percentage. A 0.4% OCF means you pay £4 a year for every £1,000 invested.
Concentration risk: defence ETFs are a “thematic” or sector fund, meaning they’re concentrated in one industry rather than spread across the whole market. That can mean bigger gains when the theme is in favour – but bigger falls when it isn’t.
Ethical considerations: defence isn’t a sector everyone wants in their portfolio. Some UK platforms exclude controversial weapons systems from their ethical or ESG fund ranges, so if this matters to you, check a fund’s holdings and screening policy before you invest.
5 Defence ETFs UK Investors Are Watching in August 2026
1. iShares Global Aerospace & Defence UCITS ETF
One of the most established ways to get broad, global exposure to the sector in a single trade, tracking major aerospace and defence names across the US and Europe, including the likes of Lockheed Martin, Northrop Grumman, RTX and BAE Systems.
It’s listed on the London Stock Exchange, which makes it straightforward to buy through most UK platforms and hold inside a Stocks and Shares ISA. Its size and liquidity make it a common “core” pick for investors wanting simple exposure to the theme, though as with any global fund, currency movements between sterling and the dollar can affect your returns.
2. HANetf Future of Defence UCITS ETF
Launched to capture the NATO spending story specifically, this fund focuses on companies tied to next-generation defence technology, including cyber security and critical infrastructure – the newer 1.5% slice of NATO’s target, not just traditional hardware makers.
That makes it a more forward-looking pick than funds weighted purely towards legacy defence contractors, though it also means a shorter track record to judge performance by.
3. VanEck Defense UCITS ETF
A broad-based European and global defence tracker that’s grown quickly alongside rising NATO budgets. It gives exposure to a mix of established prime contractors and smaller suppliers further down the defence supply chain.
Because it leans into small and mid-cap names as well as the big players, it can be more volatile than funds concentrated in the largest companies.
4. WisdomTree Europe Defence UCITS ETF
This one narrows the focus specifically to European defence companies, which is relevant given that European governments are the ones driving much of the current spending increase.
For UK investors who want exposure to the “Europe re-arms” story rather than a global mix, this is a more targeted option – though narrower funds tend to carry higher concentration risk.
5. A broad global tracker with defence exposure (e.g. a global index ETF)
Not every UK investor wants a dedicated defence fund, and that’s completely fine. A globally diversified tracker such as Vanguard’s FTSE All-World ETF already holds many of the world’s largest aerospace and defence companies as part of a much broader, more diversified portfolio.
This is a lower-risk way to have some exposure to the trend without betting heavily on a single sector – a sensible starting point if you’re not sure a thematic fund is right for you yet.
What to Do Next
- Decide how much thematic exposure you actually want. As a rough guide, many beginner investors keep thematic or sector bets to a small slice (for example 5-10%) of a wider, diversified portfolio.
- Check the fund’s factsheet on the platform you use – look at the OCF, top 10 holdings, and geographic split before buying.
- Consider holding it inside a Stocks and Shares ISA so any gains are free from UK Capital Gains Tax.
- Start small and be patient. You don’t need to invest a lump sum in one go – regular monthly investing can smooth out some of the ups and downs.
- Review your portfolio every few months to check the theme still fits your goals and risk appetite.
Risk Disclaimer
This article is for general information and education only – it isn’t regulated financial advice, and MoneyMagpie doesn’t recommend specific investments. The value of investments can go down as well as up, and you could get back less than you put in. Thematic and sector funds like defence ETFs can be more volatile than diversified, whole-market funds. Always do your own research and consider speaking to a regulated financial adviser before investing.
* Some of the links in this article are affiliate or partner links. If you choose to purchase through them, MoneyMagpie may receive a commission at no additional cost to you. We only recommend products and services we believe offer value to our readers, and our editorial content is always produced independently.
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