The European Union is racing to beef up its defenses.
In fact, according to the Associated Press, “European Commission President Ursula von der Leyen has proposed a plan to loosen budget rules so countries that are willing can spend much more on defense. Her proposal is underpinned by 150 billion euros ($162 billion) worth of loans to buy priority military equipment.”
French President Emmanuel Macron is reportedly speaking with EU leaders about the possibility of using France’s nuclear deterrent to protect Europe from Russia.
“Europe must take up this challenge, this arms race. And it must win it,” Polish Prime Minister Donald Tusk said as quoted by Reuters. “Europe as a whole is truly capable of winning any military, financial, economic confrontation with Russia – we are simply stronger.”
One way to trade potential upside is by buying defense ETFs, such as:
The Select STOXX Europe Aerospace & Defense ETF (SYM: EUAD)
While the EUAD ETF did explode from about $24.50 to $34.53 so far, it could see further upside with Europe increasing its defense spending. With an expense ratio of 0.5%, some of its top holdings include Airbus, BAE Systems, Thales SA, Rheinmetall AG, and Saab AB.
SPDR S&P Aerospace & Defense ETF (SYM: XAR)
The SPDR S&P Aerospace & Defense ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index. The XAR ETF has an expense ratio of 0.35%.
iShares U.S. Aerospace & Defense ETF (SYM: ITA)
The iShares US Aerospace & Defense ETF invests in stocks in the domestic aerospace and defense sector. These stocks can include companies that manufacture both commercial and military aircraft as well as other types of defense-related equipment.
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