Geopolitics with Market Impact

A few weeks ago, I watched the NATO summit in The Hague with great interest. Not as two NATO leaders, as Taco and Martin jokingly said, but as an investor looking ahead. What was discussed there will have an impact—both geopolitically and economically. And therefore also for you as an investor.

5% of GDP for Defense: A Structural Shift

The most important agreement? All NATO member states have committed to spending 5% of their gross domestic product on defense: 3.5% on traditional military expenditures and 1.5% on hybrid threats such as cybersecurity and infrastructure protection. The Netherlands supports this plan, Spain does not, and Trump is once again making noise.

What Does This Mean for Your Portfolio?

Defense as an Investment: From Taboo to Trend

If I had suggested investing in defense companies five years ago, I would’ve received a frown at best. But today? Capital is being structurally directed toward the sector. Interestingly, many of these companies have government contracts, which provide more stability than, for example, the volatile tech sector.

Individual Stocks: Thales, Safran, Saab, and Leonardo

One of the companies we discussed is Thales, based in Paris and active in radar systems, defense electronics, and communications. Its stock has made a significant leap this year, directly benefiting from NATO plans.

Safran, another French defense company, also serves commercial airlines. For investors who prefer not to go all-in on defense, but still want exposure to the trend, this company offers a mix. Also consider Sweden’s Saab or Italy’s Leonardo, which specializes in missile systems and combat helicopters.

ETFs: Convenience and Diversification

Investing Without Picking Individual Stocks

Prefer to avoid the hassle of picking individual stocks? Here are two interesting ETFs:

WisdomTree Defense ETF

Europe-focused, including Rheinmetall, Leonardo, and Thales. This ETF is currently up +22% since March.

VanEck Defense ETF

Globally diversified, also including U.S. players like Northrop Grumman.

Note: Past returns offer no guarantee for the future, but they do indicate momentum in the sector. And that’s where you want to be as an investor: where the movement is.

Why Now?

Investing is about timing, vision, and positioning. The NATO summit confirms structural trends that have been emerging for some time. How do you achieve returns in an uncertain world? By looking for sectors where political will and capital intersect. Defense is such a sector.

Whether you choose individual stocks or an ETF, it’s the vision that counts. The future looks turbulent. So let’s not only talk about numbers and shares but also about strategy and positioning. Because those who want to achieve returns must look beyond price charts. Understanding what’s happening outside the stock market is just as important as what’s happening inside it.

Need Advice?

Do you have questions about how to incorporate these positions into your portfolio? Feel free to call us. We’re happy to help you think it through.