Not only Leonardo, what the ETF for European defense will be like
After the listing on the London Stock Exchange and in Frankfurt last July 4 of the ETF Future of Defense (ticker NATO), the Haneft group also tries it on the Italian Stock Exchange. Among the defense companies of the index also the Italian Leonardo
The ETF for European defense is also ready to debut at Piazza Affari.
After the listing on the London Stock Exchange and in Frankfurt on 4 July of the ETF Future of Defense (ticker NATO) with a Total Expense Ratio (indicator of management costs) of 0.49%, the Haneft group also tries with the Italian stock exchange.
“Hanetf's Future of Defense replicant will make its debut in Piazza Affari on 14 July after its listing in London and Frankfurt on Tuesday 4. The Italian company Leonardo is also among the companies in the index”, reports Milano Finanza .
The index aims to give exposure to companies that generate revenue from defense and cyber defense spending by NATO and NATO Plus allies, i.e. the 31 members of the Atlantic Alliance plus states considered allies of the United States, i.e. Australia, New Zealand, Japan, South Korea and Israel.
It is the second defense-focused ETF to launch in Europe, following the VanEck Defense UCITS ETF (DFNS), which traded in April with a TER of 0.55%.
As traditional military spending has started to ramp up as NATO countries aim to meet the 2% of GDP defense budget target, HANetf has also highlighted the importance of cybersecurity, with the ETF bringing together both.
All the details.
FEATURES
The investment product replicates the Eqm Future of Defense which has 54% exposure to information technology and 46% to industry. This weighting distinguishes it from its rival VanEck Defense Ucits ETF (DFNS) which has only 30 constituents, against NATO's 48, with information technology accounting for just under 15%, notes the Financial Times .
HOW THE INDEX WORKS
Companies participating in the index must derive more than 50% of their revenues from the production and development of military equipment in the air, sea, space, land, or have commercial operations in the field of cyber security under contract with a member of NATO or an ally of NATO.
The maximum country exposure is 50%, a measure that aims to provide more diversified global exposure.
Additionally, the fund's 50/50 weighting between traditional defense companies and those focused on cybersecurity reflects a rapidly growing conflict field according to HANetf.
SECURITIES IN THE PORTFOLIO
US equities currently represent 60% of the portfolio, the top weighting, followed by France (10%), the UK and Israel (9%) and Italy (5%).
Of NATO's 41 holdings, top stocks include Palo Alto Networks (6.3%), BAE Systems (5.3%), IT companies such as Thales Group (5.2%), Broadcom (5%) and Cisco Systems ( 4.9%).
ALSO LEONARDO AMONG THE TITLES INCLUDED
As reported by MF , "the leading company in Italy in the defense sector, led today by the managing director Roberto Cingolani, appears in the ETF portfolio with a weight of 3.12% (the only Italian company in the basket)".
THE VALUE OF THE MARKET
A recent survey by HANetf found that 78% of asset managers said geopolitics had become more important in fund selection over the past year.
“Whether it is the ongoing war in Ukraine or the growing risk of conflict over Taiwan or the South China Sea, it is clear that the world is becoming a riskier place,” said Hector McNeil, founder and co-CEO of HANetf.
Global defense spending rose 4% to a record $2.24 trillion last year, according to SIPRI . It is set to continue to rise this year, even as higher interest rates drive up government borrowing costs.
NATO members were responsible for much of this spending. However, according to research by the Financial Times , only seven of NATO's 31 members met the defense spending target of 2% of GDP last year. If everyone did it, total spending would rise by more than $150 billion a year, claims the British financial newspaper.
THE STRATEGY OF THE CO-CEO OF HANEFT
“NATO members in Europe are finally taking their share of defense spending seriously. Poland, for example, now aims to spend 4% of its GDP on defense and potentially build Europe's largest land-based army,” McNeil noted, adding that the Future of Defense ETF “will provide investors with a means to access companies that will be ready to benefit from increased spending by NATO and NATO+ allies on both military hardware and cyber defense”.
"Defense-related funds exist, but they tend to be heavy industrial and not focused on NATO and its allies, which by definition are a defensive alliance and not an aggressive one," concluded Hector McNeil, founder and co-CEO of Hanetf.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/pronto-al-debutto-a-piazza-affari-etf-per-la-difesa-europea/ on Thu, 13 Jul 2023 05:00:49 +0000.