Key Takeaways
- Global X Defense Tech ETF (NYSEARCA:SHLD) has surged 153.5% over three years, significantly outpacing traditional benchmarks.
- SHLD’s assets under management reached $3.5 billion, reflecting robust liquidity and high trading volumes.
- Despite a concentration risk with 62% of assets in the top 10 holdings, SHLD remains a strategic investment due to rising global defense spending.
SHLD ETF’s Outperformance and Growth
The Global X Defense Tech ETF (NYSEARCA:SHLD) has established itself as a leading thematic fund since its launch in September 2023. Trading at $62.20 as of August 2025, the ETF has outperformed traditional aerospace and defense ETFs, alongside broader market benchmarks like the Nasdaq and QQQ, by over 99% in the last three years. SHLD’s total return of 153.5% and a one-year gain of 72% demonstrates its strong growth, fueled by increased global defense spending and a focus on AI and cybersecurity.
Since its inception, SHLD has accumulated $3.5 billion in assets under management (AUM), making it one of the fastest-growing ETFs in its sector. The fund boasts an average daily turnover of $67.8 million, showcasing robust liquidity and making it appealing for institutional investors.
Portfolio and Concentration Risks
The ETF comprises 45 companies, with the top 10 holdings accounting for 62% of its assets. Notable companies in the portfolio include Palantir, RTX Corporation, Lockheed Martin, and Northrop Grumman. This concentration allows for significant upside potential; however, it also exposes investors to vulnerabilities if the top performers experience downturns. Projections indicate strong growth for companies like Palantir and RTX, with revenue and EPS expected to rise significantly in the coming year.
Driving Forces Behind SHLD’s Success
Global defense spending reached $2.5 trillion in 2024, with a substantial portion allocated by the U.S. to AI and advanced systems—key areas of SHLD’s portfolio. NATO’s commitment to boost defense budgets, alongside increased funding from Japan and European nations, positions SHLD holdings to benefit.
SHLD’s momentum is further underscored by a six-month gain of 53% and a twelve-month surge of 73%, which far exceeds its peers. The ETF’s high annualized volatility of 22.7% poses a risk, particularly with heavy concentration in its top names, raising concerns over potential drawdowns and reliance on government spending.
Investment Implications
Though trading at a premium expense ratio of 0.50%, SHLD’s significant performance advantage—nearly double that of its peers—justifies the cost. With geopolitical tensions and technological advancements driving defense and AI procurement, the ETF is poised for continued growth. Despite existing risks, SHLD is recommended as a buy for investors looking to capitalize on strategic trends within defense and technology sectors.
The content above is a summary. For more details, see the source article.
