By Cristina Gallardo

Fund management company WisdomTree launched a new exchange traded fund focused only on European defense companies, as Europe seeks to rearm and reduce its military reliance on the U.S.

The WisdomTree Europe Defence Ucits ETF (WDEF) listed Tuesday on Deutsche Boerse Xetra and Borsa Italiana, and will list on the London Stock Exchange Wednesday. WisdomTree said it is the first ETF of its kind focused solely on European defense companies.

The new fund comes amid a fast increase in the share price of European defense companies in recent weeks, on the back of threats by U.S. President Trump to reduce U.S. military support for Europe, which have spurred efforts by European governments to spend more on defense.

The boost to military budgets across Europe creates long-term opportunities for established and emerging companies manufacturing defense equipment, designing new technologies for the battlefield, and working on the defense of space assets, such as satellites, WisdomTree said.

"Defense and security are underrepresented in many portfolios and have faced decades of underinvestment in Europe, resulting in a significant capability gap," said Pierre Debru, head of research for Europe at WisdomTree.

The ETF will invest in European defense companies, including those making civil defense equipment, components, defense electronics and space defense products.

It won't include companies involved in the development of controversial weapons banned by international law, such as cluster munitions, anti-personnel landmines and biological and chemical weapons. Companies in breach of the United Nations Global Compact standards will also be excluded, WisdomTree said.

The fund's biggest holding so far is German arms maker Rheinmetall, representing 18.5% of the index. Italian aerospace and defense group Leonardo ranks second at 15.4%, followed by Swedish peer Saab at 10.2%, and British defense company BAE Systems at nearly 10%.

Other holdings further down the list are Thales, Rolls-Royce, Airbus, Safran, Kongsberg and Melrose Industries.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

March 11, 2025 06:14 ET (10:14 GMT)

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