Defense ETFs Draw Billions Amid Global Tensions

Key Takeaways:

• Defense ETFs now hold $42 billion in assets with $9 billion in inflows this year amid rising geopolitical tensions.
• Eight out of nine new defense ETF launches since 2025 have been global or international offerings.
• The ProShares Genius Money Market ETF (IQMM) reached $22 billion in assets, the first fund meeting Genius Act stablecoin requirements.

Nate Geraci explored defense ETFs and a historic money market launch on this week’s ETF Prime, featuring VettaFi’s Roxana Islam and ProShares’ Simeon Hyman.

Islam, head of sector and industry research at VettaFi, detailed the rapid expansion of the defense ETF category. The sector now contains approximately 22 pure-play ETFs holding around $42 billion in assets. Already, defense ETFs have seen $9 billion in net inflows this year alone.

See more: Defense ETFs: Space, Drones & More

Much of the growth has occurred since late 2024, when the space had only 13 ETFs and $14.5 billion in assets. Islam attributed investor interest to rising geopolitical tensions, including conflicts involving Russia, Ukraine, and Iran.

Traditional U.S. defense ETFs remain popular. The Invesco Aerospace & Defense ETF (PPA), launched in October 2005, now holds nearly $8 billion in assets with more than $600 million in year-to-date inflows. The iShares U.S. Aerospace & Defense ETF (ITA) is the largest in the category with $13 billion in assets.

Islam noted that eight out of nine new launches since 2025 have been global or international offerings. The Global X Defense Tech ETF (SHLD) holds more than $8 billion in assets, with $6 billion gathered in the past year. The Select STOXX Europe Aerospace & Defense ETF (EUAD) rose 74% last year, while the PLUS Korea Defense Industry Index ETF (KDEF) has climbed nearly 125% over the past year.

Category Expands Beyond Traditional U.S. Contractors

Space and drone subcategories are gaining attention. The Procure Space ETF (UFO) holds $360 million in assets, with top holdings including satellite imagery company Planet Labs (PL) and broadband provider ViaSat Inc. (VSAT). Drone ETFs, including the REX Drone ETF (DRNZ) and the Defiance Drone and Modern Warfare ETF (JEDI), both launched in late 2025, each hold just over $80 million in assets.

Islam emphasized that defense ETFs have shown resilience during recent market pullbacks, with relatively strong performance compared to the S&P 500.

Geraci also spoke with Hyman, global investment strategist at ProShares, who discussed the ProShares Genius Money Market ETF (IQMM). Launched in late February, the fund has reached $22 billion in assets. Moreover, it is the first money market ETF designed to meet Genius Act requirements for stablecoin reserves. The fund holds exclusively U.S. Treasuries with a maximum duration of 93 days.

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