Exposure to European Military Sector

Investing and Markets 📈
1

Hi everyone!

I am considering re-balancing my portfolio to include some exposure to the European military sector. My TLDR thesis is that with the US presidency, the US will shift into a more of a protectionist economy and Europe will have 2 choices:

  1. If the war in Ukraine ends, they will need to boost their domestic military arsenal as the stockpiles have gone lower since the war.
  2. If the war continues, they will need to increase their supply to Ukraine.

In both scenarios I believe European countries will look into increasing their domestic input and granting more contracts to domestic producers, perhaps expanding factories etc.

The result of my research has brought me to the following allocation:

Name Ticker Divident %
Rolls Royce LON:RR 0% 15%
BAE Systems LON:BA 2.35% 15%
Rheinmetall ETR:RHM 1.11% 15%
Safran EPA:SAF 1.09% 10%
Leonardo BIT:LDO 1.20% 10%
Dassault Aviation EPA:AM 1.99% 10%
Thales EPA:HO 2.22% 5%
Hensoldt ETR:HAG 1.11% 5%
Babcock LON:BAB 0.32% 5%
Chemring LON:CHG 1.83% 5%
Melrose LON:MRO 0.86% 2.50%
ThyssenKrupp ETR:TKA 3.74% 2.50%

Before I execute I wanted to get a second opinion and/or discussion about my thesis and allocations.

3 Likes
2

I’d take a look at the ETF NATO that aims to do the same (unfortunately not on FT), but you could see what the top 10 holdings are.

3

Raytheon Systems Ltd

A major company in the UK defense market that manufactures weapons and ammunition

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4

Don’t disagree with thesis, but a lot of European governments will utilise US defence companies too. Check out NATP etf (on Freetrade).

5

Another thought is if you are in an ISA you need to buy integer amounts of stocks(no fractional shares). Depends on your capital, but this can make it difficult to drop feed expensive (per unit) stocks like Saffran and Dasssault. It will also likely mess your ratio allocations somewhat.

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