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Asset managers rush to set up negotiated funds on the European defense sector, because a recent rally has prompted investors to rethink their position on the inclusion of controversial actions in their portfolios.
Amundi, the largest asset manager in Europe, is working on the summer launch of a European FNB linked to defense companies in anticipation of an increase in military spending across the continent, according to two familiar people with the situation. Vaneck, an American fund manager of $ 114 billion, also explores the launch of a similar investment vehicle.
“There is a massive race to set up these products,” said Kenneth Lamont, analyst at the Morningstar data supplier, adding that asset managers “turn [them] Faster than I have never seen ”.
Earlier this month, the American company Wisdomtree listed what it said to be the first ETF to focus solely on European defense companies on scholarships in Germany, Italy and the United Kingdom. The fund has attracted more than $ 575 million on entry since then and has already become the second thematic fund of the platform in Europe.
“There is a very, very great interest,” said Pierre Debru, head of European research in Wisdomtree. “We have retirement funds that reach out but also wealth managers, retail investors … We see customers everywhere.”
The sudden bursting of the interest of investors in European defense comes after the United States has reduced military support in Ukraine in a brutal pivot towards Russia, many European governments now providing for increasing their production of interior weapons in the pursuit of strategic autonomy.
The Stoxx Europe Total Market Aerospace & Defense index is up 34% this year, far exceeding the larger Stoxx 600 stoxx, while investors are predicting a boom in expenses.
The rally Mark a return to a sector that has often been avoided by the main investors on the continent. The funds which invest in an environmental, social and governance framework have frequently excluded defense companies, such as the German group Rheinmetall and the Italian group Leonardo, from their portfolios.
But some pension investors plan to mitigate their defense exclusions, arguing that investment in weapons manufacturers has become important to defend democracy.
Anders Schelde, director of investments at the Danish Pension Fund Akademikerpension, said that it was quite sure that its defense policy would be debated at the annual general meeting next week. “I would not exclude that the board of directors could soften our position,” he said, adding that the current exclusion policy was “quite strict”.
Ronald Wuijster, director general of the APG, who manages 616 billion euros in the name of four Dutch pension funds, said that he “could do even more” to help finance the Dutch and European defense. The largest retirement fund manager in Europe is currently investing around 2 billion euros in companies related to the sector.
“I have never seen a change like that[for European markets]. . . We can no longer consider the United States as a safe and reliable partner and we see this in the place where money has been going on in recent weeks, “said Aleksander Peter, actions analyst at Bernstein.
A long period of underperformance in Europe seemed to end with “all investors wishing to join the party,” he added.
Tom Bailey, research manager in London Hanetf – who announced this week his intention to launch a European defense FNB – said that investors were “definitively sweeter” when it comes to including defense companies in their portfolios.
“Before some people find it uncomfortable to add a defense company, but the interest is now going up everywhere,” he said.
Historically, investors had been “delicate” to put money in the military sector, said Mike Eakins, director of investments in Phoenix, the largest retirement and savings supplier in the United Kingdom.
But now, “he said,” long-term asset owners … should invest more in defense “.
