Media Release
Defence stocks enter multi-year investment cycle amid rising geopolitical tensions
14 January 2026
Global defence stocks are entering a multi-year investment cycle as escalating geopolitical tensions and a major shift in US military policy drive sustained investment in global defence capabilities.
Global X ETFs Australia senior investment strategist Billy Leung says investor focus on the sector has intensified following US President Donald Trump’s call for a US$1.5 trillion defence budget in FY27 - a proposed increase of around 50 per cent and the largest uplift in US military spending in more than 70 years.
“While the headline figure has fuelled short-term market gains, investors are now pricing in years of elevated defence spending, rather than a single budget-cycle boost,” Mr Leung said.
The Global X Defence Tech ETF (ASX: DTEC) was the top-performing defence ETF in Australia in 2025, with a return of 61.9% over the 12 months to 31 December.
“Last year’s performance was supported by an ongoing lift in European defence spending, expanding order books and a broad recovery across core defence, aerospace and munitions suppliers. This momentum has carried into the new year,” Mr Leung said.
“2026 will be shaped by a broader set of drivers because the story now includes the United States. Recent operations in Venezuela and earlier in Iran highlighted pressure on inventories and the rising dependence on precision weapons, Intelligence Surveillance and Reconnaissance (ISR) platforms, electronic warfare systems and space-based capabilities. These requirements point to a multi-year investment cycle rather than a single fiscal year uplift,” he said.
Major US defence contractors including Lockheed Martin, RTX Group and General Dynamics have rallied as investors assess the implications of sustained government spending, long-dated contracts and expanding global order backlogs.
“Australian investors have exposure to these stocks with DTEC, which also includes major defence companies from Europe and Asia,” Mr Leung said.
“With governments increasingly treating defence as critical national infrastructure rather than discretionary spending, markets are signalling a clear shift. The defence investment cycle is becoming longer, broader and more entrenched, and defence stocks are being repositioned as a structural exposure in an increasingly unstable world.”
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Please contact James Mitchell, Global X Australia | +61 413 619 034 | james.mitchell@globalxetfs.com.au
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1. Assets under management as at November 2025, Global X
2 Assets under management as at September 2025, Mirae Asset Financial Group
3 Assets under management as at November 2025, Mirae Asset Global Investments
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