From Yahoo Finance: 2025-04-07 07:00:00

The U.S. stock market has seen declines in 2025 due to investor concern over the tariff war’s impact on inflation and economic growth. European defense stocks have been performing well and may be a good investment option. The Global X Defense Tech ETF has returned 16.7% in 2025 and offers exposure to companies benefiting from defense technology.

European NATO members are increasing defense spending in response to concerns about U.S. commitment to the alliance. Ursula von der Leyen has called for a significant boost in defense spending through the ReArm Europe Plan. European defense stocks are gaining attention from U.S. investors, with some trading over-the-counter and others requiring access to foreign exchanges.

The Global X Defense Tech ETF offers a diversified approach to investing in European defense stocks. With 37 holdings, including U.S., European, and Asian stocks, the ETF focuses on defense technology companies. The ETF has an expense ratio of 0.50% and excludes companies with less than 50% revenue from defense applications, such as Boeing.

Global X Defense Tech ETF stands out for its focus on defense technology rather than traditional aerospace and defense. The ETF includes Palantir Technologies, a U.S.-based company specializing in AI-powered software for government defense contracts. European defense stocks are expected to outperform U.S. stocks, making the ETF a potential opportunity for growth-oriented investors. The top three defense companies in the Global X Defense Tech ETF are Rheinmetall, Palantir Technologies, and RTX Corp. Rheinmetall, Germany’s largest defense contractor, saw a 124% 1-year return. Palantir Technologies, a US company, had a 229% 1-year return after going public in 2020. RTX Corp, another US company, had a 20.9% 1-year return.

Hanwha Aerospace, a South Korean company, had a 171% 1-year return and a 3,382% 5-year return. Hanwha Aerospace does not trade over-the-counter in the US, so US investors wouldn’t have realized these gains due to currency exchange rates. The Global X Defense Tech ETF had a 32.8% 1-year return and $861 million in assets under management as of 2/28/25.

Investors interested in European defense stocks can consider buying shares of the Global X Defense Tech ETF, which includes holdings in European defense companies. Before investing in Palantir Technologies, consider that it wasn’t on The Motley Fool’s list of the top 10 stocks for investors to buy now. The Motley Fool recommends BAE Systems, Lockheed Martin, RTX, and Rheinmetall Ag.

Read more: Interested in European Defense Stocks? You Might Consider Buying This Global Defense Tech ETF.