3 Under-the-Radar Defense ETFs with Interesting Strategies

With geopolitical tensions elevated and global military spending rising, defense stocks have been gaining attention. However, most attention typically goes to the etfs">same well-known funds. Meanwhile, several under-the-radar defense ETFs offer unique ways to gain exposure to the sector.

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**1) High-Risk Tactical Play: Direxion Daily Aerospace & Defense Bull 3X Shares DFEN +1.63% ▲ **

We begin with Direxion Daily Aerospace & Defense Bull 3X Shares. This ETF is designed for investors who want maximum exposure to short-term moves in defense stocks. Indeed, DFEN uses leverage to deliver roughly three times the daily performance of a basket of major U.S. aerospace and defense companies. As a result, when the sector rallies on geopolitical news or rising defense budgets, gains can be magnified significantly.

However, losses can also compound quickly if sentiment turns negative, making this fund unsuitable for long-term holding. Instead, it is typically used by traders looking for tactical exposure during periods of volatility or strong momentum.

**2) Global Rearmament Theme: Themes Transatlantic Defense ETF NATO -0.20% ▼ **

Separately, for investors who want international exposure, the Themes Transatlantic Defense ETF focuses on defense companies from NATO member countries. By doing so, it benefits from the surge in military spending across Europe and allied nations, many of which are rapidly rebuilding armed forces after decades of underinvestment.

Because it includes both U.S. and international firms, the fund provides a more diversified approach to the global defense industry. This makes it particularly relevant as geopolitical risks increasingly involve multinational alliances rather than isolated national conflicts.

**3) Next-Generation Security Focus: SPDR S&P Kensho Future Security ETF FITE -1.41% ▼ **

Finally, we have the SPDR S&P Kensho Future Security ETF. Instead of concentrating solely on traditional weapons manufacturers, FITE targets companies involved in cybersecurity, artificial intelligence, drones, surveillance systems, and advanced defense technologies. For investors who believe future conflicts will be shaped by software as much as hardware, this ETF is the right choice.

Wall Street’s Take

Turning to Wall Street, among the three defense ETFs mentioned above, analysts think that FITE has the most room to run. In fact, FITE’s price target of $110.13 per share implies 25.7% upside potential.

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