Global X SHLD ETF Defense ETF - A Tactical Play On Fast Growing Defense Industry
πππSince 2022, the turbulent geopolitical conflicts in many parts of the world has caused an increased demand for Defense products and aircraft. In the US, whether Kamala Harris or Donald Trump wins the Presidential Election, America is probably going to boost its spending for the military in 2024 and beyond as both candidates are pro defense.
$Global X Defense Tech ETF(SHLD)$ seeks to invest in companies positioned to benefit from the increased adoption and utilisation of Defense Technology. This includes companies that build and manage Cybersecurity Systems, utilise Artificial Intelligence and big data and build advanced military systems and hardware such as Robotics, Fuel Systems and Aircraft for Defense Applications.
In just 1 trade you gain access to 35 of the best and strongest Defense companies not only in the US but globally as well.
The Top 10 holdings include $Lockheed Martin(LMT)$ $RTX Corp(RTX)$ $Northrop Grumman(NOC)$ BAE Systems, General Dynamics Corp, $Palantir Technologies Inc.(PLTR)$
The Top 10 holdings weightage is 62%. Total number of holdings is 35. The expense ratio is 0.50%. Dividends are paid semi annually. The current dividend yield is 0.93%.
Even though the US Defense companies take 64% weightage of the ETF, European Defense companies also feature in the ETF with 30% weightage and Asia Pacific at 5%.
Lockheed Martin is a major US diversified defense company with core business concentration on aerospace products. These include aircraft, space launchers, satellites and defense systems.
RTX manufactures aircraft engines, avionics, aerostructures, cybersecurity solutions, guided missiles, air defense systems, satellites and drones.
Northrop Grumman is a world leader in the design, development and production of naval systems. From sonar that can map the deepest depths of the ocean to anti submarine systems and advanced electronic warfare, Northrop Grumman is constantly evolving to counter increasingly sophisticated threats at sea.
Palantir is big on data analytics. It supports government agencies to use surveillance and big data technology to identify threats in conflict zones. It has been winning big contracts from the US government.
The US Senate Committee on Armed Service has authorised USD 841.4 billion for the Department of Defense, USD 32.4 billion for National Security Programs within the Department of Energy and USD 438 million in defense related activities. This is for the US Financial Year 2024 Defense Funding approved on December 22 2023.
Performance wise, SHLD is one of the fastest growing ETFs. It has risen 2.8% in the past 5 days and is up 31.9% year todate. In 2023, SHLD has skyrocketed 48.5%.
Wall Street Analysts are bullish on SHLD with a Buy rating, Average Target price of USD 39.23, an upside potential of 6% according to 36 analysts surveyed by Tipranks.
I like SHLD as it is not US centric and it does the heavy lifting for me to select the best defense stocks while weeding out the non performing ones. I notice that Boeing, the troubled commercial aircraft manufacturer is not included in this ETF.
SHLD also offers me value for money and its entry point at USD 36.75 is lot easier on my pocket than buying say Lockheed Martin at USD 560.13 per share.
The best offense is a good defense ETF like SHLD as the Defense Industry is expected to grow exponentially in the future.
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