Interest in These 5 Defense ETFs Surges as Investors Rotate Out of Niche Products

The recent market volatility tied to geopolitical events has pushed investors back toward more traditional sectors, especially defense. According to Todd Rosenbluth of VettaFi, who spoke with CNBC, overall demand for ETFs remains strong, but the focus has shifted away from more complex or niche products and toward areas that are directly linked to global events. As a result, the following defense ETFs have started attracting more attention from investors looking for targeted exposure:

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• iShares U.S. Aerospace & Defense ETF ITA +1.34% ▲

• Invesco Aerospace & Defense ETF PPA +1.05% ▲ ,

• SPDR S&P Aerospace & Defense ETF XAR +1.51% ▲

Importantly, though, the interest is not limited to broadly diversified defense funds. Instead, investors are also exploring more specialized ETFs that focus on specific parts of the defense and aerospace industry. For example, the Global X Defense Tech ETF SHLD +1.10% ▲ offers exposure to newer technologies tied to modern warfare, while the Rex Drones ETF DRNZ +1.64% ▲ focuses on drone-related companies.

This means that investors are not just looking for general defense exposure, but also for ways to capitalize on emerging trends within the sector that could see faster growth. Therefore, even though volatility is creating uncertainty, it is also leading to more focused investments in defense-related ETFs that offer clearer and more immediate exposure to global events.

Which Defense ETF Is the Better Buy?

Turning to Wall Street, out of the five ETFs mentioned above, analysts think that DRNZ has the most room to run. In fact, DRNZ’s price target of $34.70 per share implies 37% upside potential.

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