How (and Why) to Invest in the Defense Sector

“`html

Growing Interest in Defense Sector

In recent years, the defense sector has seen a significant surge in interest, driven by an unstable geopolitical landscape and military events such as the conflict in Ukraine and rising tensions in the Middle East.

These conflicts have expedited the demand for security and technological innovation, prompting numerous investors to shift their focus towards financial opportunities associated with defense.
What are the main developments in the defense sector?

Defence and Aerospace Industries

Within the expansive defense field, there are several subsets that deserve separate consideration.
Perhaps the most well-known is the aerospace sector, which encompasses the development and production of military aircraft, missiles, satellites, and various spacecraft, many of which serve both military and civilian purposes.

This segment, while paramount, is more traditional and less innovative compared to the emerging technology sectors within defense.

Another crucial subset is cybersecurity, which has witnessed a spike in investments due to the increase in global cyberattacks.
Companies in this field provide solutions to safeguard critical infrastructures, government networks, and military systems, becoming essential for national security in every country.

Finally, the satellite communications and artificial intelligence sectors are rapidly transforming the management and control of military operations and infrastructures.

Investing in Defense on the Stock Market

The true point of interest in recent years, however, lies in the latter two sectors—the cutting-edge fields that are revolutionizing the very concept of defense.
But what exactly is “Defense Tech”? This term refers to a set of advanced technologies utilized for security and defense, bolstered by innovations in information technology, artificial intelligence, big data, and automation.

Companies operating in this sector focus on an array of advanced technologies, including cybersecurity systems designed to prevent hacking assaults on military and governmental infrastructures.
Another key area is artificial intelligence, which is utilized to enhance drone accuracy, analyze real-time data collected in the field, and manage automated military operations.

Global X Defense Tech ETF and Emerging Technologies

Among the various market solutions, a passive fund that is gaining increasing attention is the Global X Defense Tech ETF—an Exchange Traded Fund that focuses on companies developing and producing advanced defense technologies, such as cybersecurity systems, artificial intelligence, big data, and modern military hardware.

Unlike other defense sector ETFs, which necessarily include companies tied to conventional weapons manufacturing, SHLD zeroes in on firms innovating in more futuristic technologies.

“`