EUAD, JEDI, and WAR: 3 Overlooked Defense ETFs as Military Spending Ramps Up

Defense spending has been increasing around the world as geopolitical tensions rise and governments invest more heavily in military technology. As a result, many investors are looking for ways to gain exposure to the defense industry without having to pick individual companies. One of the easiest ways to do this is through exchange-traded funds (ETFs), which allow investors to buy a basket of defense-related companies with a single security. However, not all defense ETFs focus on the same types of companies, and that is where funds like EUAD, JEDI, and WAR start to differ.

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1. EUAD – European Aerospace and Defense

To begin with, the Select STOXX Europe Aerospace & Defense ETF EUAD -2.20% ▼ focuses specifically on companies based in Europe that generate a large portion of their revenue from aerospace and defense activities. In fact, companies in the index must derive at least 50% of their revenue from areas such as aircraft manufacturing, defense systems, or other aerospace-related businesses.

Because of that structure, the fund is essentially a targeted way to invest in Europe’s defense industry rather than the global market. As a result, EUAD’s holdings typically include major European contractors such as Airbus EADSY +0.23% ▲ , BAE Systems BAESY -2.22% ▼ , and Leonardo FINMY -3.86% ▼ .

2. JEDI – Modern Warfare Technologies

Meanwhile, the Defiance Drone & Modern Warfare ETF JEDI -0.04% ▼ focuses on companies that are involved in next-generation military technologies rather than just traditional defense contractors. In other words, the fund targets areas such as military drones, artificial intelligence used in warfare, unmanned systems, missile technology, electronic warfare, space defense, and military cybersecurity.

Because modern wars are increasingly relying on advanced technology and data systems, the ETF aims to benefit from that change. As a result, JEDI’s holdings include companies such as L3Harris Technologies LHX +0.70% ▲ , Rocket Lab RKLB +4.40% ▲ , and Palantir PLTR +0.30% ▲ .

3. WAR – Defense and Security Ecosystem

Finally, the U.S. Global Technology and Aerospace & Defense ETF WAR +0.23% ▲ takes a broader approach by combining defense companies with industries that support the military and national security ecosystem. Instead of focusing only on weapons manufacturers, the ETF also includes companies tied to semiconductors, cybersecurity, data centers, and homeland security technologies.

Because modern defense increasingly relies on computing power and digital infrastructure, the fund also offers exposure to the supporting industries. As a result, WAR’s holdings can include companies such as DroneShield DRO +1.49% ▲ , Micron Technology MU +3.86% ▲ , and Palantir.

Wall Street’s Take on Defense ETFs

Turning to Wall Street, out of the three ETFs mentioned above, analysts think that WAR has the most room to run. In fact, WAR’s average price target of $34.03 per share implies 30.3% upside potential.

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