Geopolitical risk linked to HanETF’s $50m ‘NATO’ inflows

A defence-themed ETF has raised just over $50 million since its launch six months ago.

HanETF announced it had raised $51.1 million for its Future of Defence Ucits ETF – which has the ticker “NATO” – since launch in July 2023.

The ETF invests in companies providing equipment or cyber defence services to NATO or NATO+ member countries.

HanETF said governments are committing larger amounts to both physical and cyber defence owing to the increase in geopolitical tensions, noting that NATO members have made renewed efforts to boost their military spending to the alliance’s 2% of GDP spending targets, with several members such as Poland intending to exceed this.

In 2023, HANetf conducted a survey of wealth managers and found that 78% had placed increased importance on geopolitics when engaging in fund selection. That perception of geopolitical risk has since heightened so far in 2024, the firms said, with the US and UK conducting airstrikes against the Houthi militia in response to attacks on global shipping and the continued targeting of US troops in the Middle East by groups alleged to be sponsored by Iran.

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Giving further background, the firm said that in 2022, a record $2.2 trillion was spent on defence —the highest level ever recorded. While the number for 2023 have yet to be published, the figure is expected to surpass 2022.

Including cyber security, defence spending in European NATO members has increased, with these countries being “shaken out of their post-Cold War spending slump” following the Russian invasion of Ukraine.

Hector McNeil, co-CEO of HANetf, said: “Whether it’s the ongoing war in Ukraine or the growing risk of conflict over Taiwan or the outbreak of war in the Middle East, it is clear the world is becoming a riskier place. The post-Cold War world is over – and governments around the world are recognising this.”

Having a NATO screen meant investors were not exposed to geopolitically “irresponsible actors”.

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