How to Invest in European Defense with ETFs: Top 4 ETFs for 2026

With the rapid evolution of European states’ military strategies, investing in the defense sector in Europe today appears as a major strategic opportunity to diversify one’s stock portfolio in 2026.

In this article, we will first explain why investing in the European defense sector via ETFs constitutes a real opportunity in 2026. Then we will analyze and compare the best ETFs in the European defense sector and we will see concretely how to invest in European defense with ETFs.

Although ETFs on the European defense sector track indices composed predominantly of European stocks, most are not eligible for the PEA, notably due to their exposure to British equities. Only two European defense ETFs are currently eligible for the PEA. It is therefore essential to choose your broker carefully to invest in these ETFs from one of the best stock accounts or one of the best PEA accounts, while keeping fees low and having tools tailored to your investment strategy. If the choice of ETFs is important, remember that choosing the best stock broker is just as important.

Why invest in the European defense sector in 2026?

Even in 2026, it will be difficult to ignore the significant weight of defense in the priorities of European countries. Indeed, Europe must now prepare to ensure itself a substantial share of its security, which implies substantial investments in the defense industry. In this context, several states have thoroughly revised their budget choices.

Germany, for example, has unlocked an exceptional fund of 100 billion euros to modernize its army. In parallel, the country continues to sharply increase its military spending, with a defense budget that now exceeds 150 billion euros in 2026, including the special fund dedicated to rearmament. France, for its part, continues to increase its defense budget year after year, now surpassing 57 billion euros for 2026 according to the information available on the 2026 finance bill. On the Senate’s site, we read that it could even reach 66 billion euros.

This rise in military capability directly translates into activity for defense manufacturers. Groups such as Thales, Airbus, Rheinmetall, Leonardo or Dassault Aviation are seeing orders flow in, whether for armored vehicles, fighter jets or advanced electronic systems. At the same time, newer segments, such as military cybersecurity, anti-drone systems or space technologies, are gaining ground, supported by innovation and growing state needs.

For investors, this transformation of the sector opens up interesting opportunities. While defense had until now often been a topic sidelined for ethical or political reasons, it today returns to the heart of investor interest.

Why invest in European defense with ETFs?

The thematic defense ETFs offer a particularly relevant way to gain exposure to a sector as specific as European defense. Unlike purchasing an individual stock based on the performance of a single company, an ETF lets you invest simultaneously in a set of major sector players (Thales, BAE, Saab, Safran, Airbus, etc.). This “basket” of stocks significantly reduces the risk tied to a single company’s misstep, such as a late delivery, a canceled contract or poor results.

But beyond this diversification effect, ETFs also allow capturing a long-term trend. Specifically, the remilitarization of Europe, the modernization of equipment, and the emergence of new defense technologies. ETFs are designed to reflect the evolution of an entire sector, not the fluctuations of a single company. This enables the investor to position themselves on the overall growth of the European defense market, rather than the isolated success of one firm. Not to forget that over time, the ETF index manager can decide to reduce exposure to weaker stocks and optimize investments in stronger performers.

Another advantage lies in the ease of access. ETFs are listed on the stock exchange like ordinary shares, which means they can be bought or sold easily at any time during the trading day, without needing to follow the news about each company. Finally, the management fees of these products typically remain modest compared to those of an actively managed fund or a discretionary mandate (often below 0.50% per year).

In conclusion, the thematic ETFs focused on European defense are a practical, efficient and coherent solution for investors looking to gain exposure to this deep transformation of the European military and industrial landscape, while maintaining a balanced approach between potential return and risk management.

What is the best ETF to invest in the European defense sector? Top 4 European defense ETFs 2026

In Europe, we have currently identified 20 ETFs offering targeted exposure to the defense sector, with some providing global exposure, including the United States and other major military powers. However, there are 8 ETFs that focus specifically on European defense. It should be noted that only two of these 8 European defense ETFs are eligible for the PEA. Indeed, the majority of these ETFs also provide exposure to the United Kingdom, whereas since Brexit UK companies are no longer eligible for the PEA. For these ETFs to become PEA eligible, exposure to UK companies would need to fall below 25%.

We will present below 4 ETFs to invest in European defense, starting with an ETF that is eligible for the PEA.

1. What is the BNP Paribas Easy Bloomberg Europe Defense ETF (PEA)? Café de la Bourse Review

This ETF provides exposure to the leading European defense and aerospace companies. It tracks the performance of the Bloomberg Europe Defense Select Index, composed of companies active in military equipment manufacturing, cybersecurity, or aerospace. The objective of this ETF is to capture the growth of a sector that has become strategic again in today’s geopolitical context.

The BNP Paribas Easy Bloomberg Europe Defense ETF offers two major advantages: it is priced in euros, and most importantly, it is eligible for the PEA.

As noted earlier, only two such ETFs are eligible for the PEA… and the second is the same ETF in a “distribution” variant, also managed by BNP. The only difference is the distribution method, since one capitalizes dividends automatically, while the other distributes them. Thus, you can choose the version best suited to your yield strategy.

Main characteristics of the BNP Paribas Easy Bloomberg Europe Defense ETF

ETF Performance: BNP Paribas Easy Bloomberg Europe Defense

2. What is the WisdomTree Europe Defence EUR Unhedged ETF? Café de la Bourse Review

The WisdomTree Europe Defence EUR Unhedged UCITS aims to deliver targeted exposure to the European defense sector while adhering to certain ethical criteria. It excludes companies involved in prohibited weapons or violating international norms. The index tracked by the WisdomTree Europe Defence EUR Unhedged ETF focuses on European companies from signatory nations of the Nuclear Non-Proliferation Treaty, with selection based on their degree of exposure to the defense sector.

As its name suggests, this ETF does not offer USD/EUR currency hedging.

Main characteristics of the WisdomTree Europe Defence EUR Unhedged ETF

WisdomTree Europe Defence ETF Performance Chart

3. What is the HANetf Future of European Defence ETF? Café de la Bourse Review

*Your capital is at risk. See terms on the site.

The HANetf Future of European Defence UCITS ETF has been designed to capture the growth potential of European companies active in defense, cybersecurity and critical technologies. The HANetf Future of European Defence ETF relies on an index that selects companies in line with ESG criteria, while excluding those involved in controversial weapons or serious violations of international norms. The HANetf Future of European Defence seeks to reflect the new security challenges facing Europe and positions itself on the companies that are building tomorrow’s defense.

Main characteristics of the HANetf Future of European Defence ETF

HANetf Future of European Defence ETF Performance Chart

4. What is the Amundi Stoxx Europe Defense ETF? Café de la Bourse Review

With the launch on May 12, 2025 of the Amundi Stoxx Europe Defense UCITS, Amundi enables direct exposure to European companies generating a substantial portion of their revenue from defense activities, while following the STOXX® Europe Total Market Defense Capped index.

The Amundi Stoxx Europe Defense ETF is offered with very competitive management fees of 0.35% per year, and it is currently one of the most attractive ETF products in this theme on the market (only two iShares and Invesco ETFs offer similar low fees in the defense sector, but not targeting Europe alone). It is listed on Euronext Paris under the ticker DEFS.

Main characteristics of the Amundi Stoxx Europe Defense ETF

Performance ETF Amundi Stoxx Europe Defense

How to invest in the European defense sector with ETFs in practice?

Today, investing in European defense via ETFs is fairly straightforward, even for investors with little stock market experience. The European defense sector ETFs we presented are traded continuously and can be purchased in a few clicks on broker platforms such as XTB, EasyBourse or Freedom24. Another positive point is the unit price of these European defense ETFs, below 30 €, which makes them accessible to almost any budget without needing to buy fractional ETF shares.

For investors who want to invest without worrying too much about the right moment, the DCA method through an investment plan is well suited. It means investing a little at a time, at regular intervals, which helps smooth price fluctuations over the long term. This avoids having to “time” the market, which is often tricky. Stockbrokers such as Trade Republic or eToro offer ETF investments through an investment plan.

More seasoned investors can also trade European defense ETFs with online brokers such as Interactive Brokers, Boursorama or Bourse Direct. Whatever approach you choose, these ETFs allow you to benefit from the renewed interest in the European defense industry while adjusting the strategy to your profile and objectives.

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