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Global X Defense Tech ETF (SHLD)
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Select STOXX Europe Aerospace & Defense ETF (EUAD)
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Global X Defence Tech Index ETF (SHLD)
Q: John Hood recently had SHLD as a top pick. I’m interested in the global defense space given geopolitical tensions and recent NATO messaging around moving defense spending targets from 2% of GDP to 3.5-5%. He suggested the US ETF ( NYSEARCA). I see there’s a Canadian offering SHLD.TO which appears to be a new offering. The US ETF has had terrific performance over the past year. Could you please discuss the merits of this ETF and comment on whether the Canadian version should see similar performance, assuming the geopolitical landscape remains fraught.
As a second question, do you have another ETF recommendation in this space and would you prefer it over SHLD? Please explain your rationale. Thanks so much for your expertise.
As a second question, do you have another ETF recommendation in this space and would you prefer it over SHLD? Please explain your rationale. Thanks so much for your expertise.
5i Research Answer:
EUAD would be our other suggestion, as it is seeing huge benefit from Europe's move to ramp up defense spending in response to possible lower US support in the region. EUAD is up 66% this year and outlook is still positive. SHLD is up 56% and looks very good also for the sector. SHLD in Canada only holds units in SHLD (US) and can be considered the same. Assets though are only $20M right now. SHLD owns 45 large cap defense/security stocks, with 52% US exposure. These are global leaders who will benefit from increased sector spending.