war! What is it good for? Apparently they’re sharing it on Rheinmetall.
With the launch of last week’s European defence ETF with WisdomTree, I thought I’d take a quick look at whether the revival of weapons as an investment theme could drive away some of my old favorites, such as healthcare and technology.
The question is, will it continue?
That’s what the people at Arbuthnot Latham seem to think.
“The theme of defense is likely to be a thematic play rather than a ‘Sugar Rush’,” said Jason da Silva, head of investment strategy. “We have seen the rise in European defence spending accelerated very sharply over the past few weeks since the German election, continuing for 10 years.”
However, he pointed out the dangers of subject funds that tend to arrive quite late to out-performing parties. It’s already too late, effectively by the time the asset manager understands which new themes to launch and the fundhouse launches the fund accordingly.
Paul O’Neill, chief investment officer at Bentley Reed, said these companies could already be collecting all their annual profits in the first two months of the year.
Tertius Bonnin, EQ’s sustainable portfolio manager, said there is a “clearly opportunistic element” to launching new ETFs following 30% meetings at these companies, but it tends to form a normal part of the broader regional index anyway.
Whether it is completely ethical is another question that is best for DFMS to contemplate with their clients.
As it stands, according to the FCA, there are no rules that prevent ESG investors from using defensive assets in their portfolios. It comes down to the sustainability policy of individual homes.
