As The World Arms Itself, Consider Investing In Defense

As The World Arms Itself, Consider Investing In Defense
Luke Suddards

over 1 year ago1 min

Mentioned in story

The temperature of geopolitical affairs is on the rise, with Russia and Ukraine engaged in an all-out war, and tensions between China and Taiwan still on a steady boil. So it’s no wonder that plenty of countries are spending more on their defense and attack capabilities at the moment. The G7 nations, the world’s seven largest advanced economies, let their defense spending as a fraction of their economies decline over the years, but now look set to reverse course. Analysts at Morgan Stanley expect we could see 11% compound annual growth in the defense sector through 2030 due to the expected ramp up in military spending. Take the UK, for example: the country has already pledged to double its annual defense spending, to reach £100 billion ($113 billion) by then.

And these days, of course, war isn’t fought only on battlefields with bullets and tanks: cyberwarfare can be waged with a single keystroke, a fact that was brought home recently when major US airports were hit by a spate of cyberattacks. Forecasts suggest that the global cybersecurity market could grow to more than $370 billion by 2028, from nearly $180 billion in 2021.

If you fancy capitalizing on this trend, the iShares US Aerospace & Defense ETF (ticker: ITA; expense ratio: 0.39%) could be a good way to get your foot in the door. And, because digital warfare and cybersecurity could also be worth exploring, you might want to check out the First Trust NASDAQ Cybersecurity ETF (ticker: CIBR; expense ratio: 0.6%).

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