June 18, 2025 • 17 mins
One of the hottest themes of 2025 is defense companies as potential US isolationism has other countries scrambling to beef up their military. And within that it is European stocks that have really led the charge. This theme went from rags to riches overnight practically but it's been largely a winner take all category.
On this episode of Trillions Joel and Eric speak with Bloomberg Intelligence's Senior ETF Analyst for Europe, Henry Jim about the wild frenzy to launch European defense ETFs around the world to catch this massive wave of returns.
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Speaker 1 (00:06):
What come Antrilliance.
Speaker 2 (00:06):
I'm Joel Webber and I'm Eric bel Cheers.
Speaker 3 (00:13):
Eric, you're in London this week and I was just there.
But we're going to have an episode where we're going
to talk about one of the big themes I think
in Europe in the world right now. But maybe you've
noticed Donald Trump, president of the US, changing a few
things in a strategic importance and how Europe defends itself
(00:35):
is going to be a really interesting area to watch.
NATO obviously the bedrock of sort of this transit Atlantic
alliance that is really created stability, geopolitical stability in the
world for sixty plus years, but there's some big questions
about what Europe can do on its own. And of
course there's an ETF specifically geared at defense in Europe
(01:00):
that's that product.
Speaker 2 (01:01):
Yeah, it's a really great product story and marketplace story
as well, because when you have thematic ETFs, sometimes you
don't know when your number is going to come up.
And European defense, I mean almost seems like an oxymoron,
not quite that far, but it was like, why would
I buy that?
Speaker 1 (01:16):
Right?
Speaker 2 (01:16):
All of a sudden, it's a hot area because they're
scrambling to get more better defense, and so all that
money is people front running the stocks. So there's an
ETF in the United States from Tuttle that already has
close to a billion dollars within a year, which is unbelievable.
And then I was in Paris and we had a
round table with some French issuers and they were all
(01:38):
talking about this mad scramble to launch homegrown European defense
ETF because the one here is a big hit. So
kind of reminds me of like couple themes in years
past where something would happen in the news and the
whole industry would just like scramble to meet the moment.
And that's what you have here with this.
Speaker 3 (01:56):
And joining us to talk through European Defense ETFs.
Speaker 1 (02:00):
It's going to be Henry Jim, an ETF analyst with.
Speaker 3 (02:03):
Bloomberg Intelligence, this time on trillions Defense Defense.
Speaker 1 (02:12):
Henry, welcome back to Trillions.
Speaker 4 (02:14):
Thank you, great to be here.
Speaker 1 (02:16):
Okay, so give us a vibe check.
Speaker 3 (02:18):
How interesting is this space having you know, kind of
been a sleepy one for a long time.
Speaker 4 (02:26):
Well, I don't know about sleepy. It just sort of
like jumped onto the stage. I've been in ETS for
a couple of decades. Now, this is probably one of
the biggest launches I've seen. The product question is the Woods'
Tree European Defense ETF WDF. It launched in March and
it's already gathered two point five billion euros. That's almost
three billion dollars, which I've never seen anything here in
(02:49):
Europe since I've been covering it.
Speaker 2 (02:51):
That's US equivalent like ten billion. I mean, that's such
a big amount of money for that. And obviously Trump
was elected in jet in November, he started to rough
things up on the NATO front like a couple months.
Speaker 1 (03:04):
After having already done that in his first term.
Speaker 2 (03:07):
True, well, what did the Wisdom Tree file right before
he was How did like, did they foresee this? You think?
Speaker 4 (03:13):
I'm sure they did. I mean, I don't know exact
timeline when they filed, but it takes about three to
four months launch. So if they launched in March, they
must have filed like back in November.
Speaker 2 (03:22):
Probably right when he won. They launched, and they had
the they have that market to themselves basically or uh kind.
Speaker 4 (03:28):
Of no, as soon as they launched, I think within
the the first month or so. The first ones came
right after them. So now we have seven seven European
defense ETFs in less than two and a half months.
Speaker 1 (03:42):
So just let's stick with w DEF for a moment.
Speaker 3 (03:47):
What did you know, What were they able to put
in this fund that got people excited?
Speaker 4 (03:53):
Oh well, it's an index tracker. To be honest, I
don't think it's exactly what they put into it. It's
still exposure. But the spolure looks pretty equitable, if not diversified.
You got like the top holding is a German company
that specialized in contract defense contracting. The top country represented France,
(04:17):
the second is UK and the second top holding is
the Italian company called Leernardo SPA, also one of the
world's largest defense contractors. So actually I think it's just exposure,
not particularly what it is. They just had a whole
smattering of European defense companies and it's a it's self interingxing,
so they developed their own deck so they had control
(04:38):
over what goes in at any time as well.
Speaker 3 (04:41):
So, Eric, when you think about a category like this
and you have an early mover like this, and how
are people going to try and distinguish their products if
there's going to be you know, seven plus of these things.
Speaker 2 (04:52):
Yeah, they'll they'll mix it up a little bit. You
see some names in most of them. I mean, I'll
be honest, I don't recognize a lot of these European names.
I mean, the one had the name SPA and I
thought it was like for vacations, but apparently that's what's
that Italian word for what for ink? Yeah, anyway, I'm
way out on my def's child. But anyway, these companies
(05:13):
are within this theme. Some will equal weight it, some
will modify equal weight it. That will change the volatility.
Some will be cheaper, some came on try to be
able to will be the low cost one. It's like
the way a category plays out over the course of
like three years. This category played out in the course
of like three months, with everybody trying to angle a
little differently. But it really is a story of first
(05:35):
to market. And this is why we talk about first
market is so important and why people file stuff that
seems a little crazy or ahead of its time, because
if you are first to market and you hit it
right at the right time, it's really tough for any
competitor to eat into your assets, even if they do
have better performance, better costs. Right are you finding that here.
(05:57):
What percent of the total europe defense theme does the
wisdom Tree one have?
Speaker 4 (06:04):
Oh well, currently it's ninety ninety three. Yeah. I think
a comparable is the van Neck brought it to launch
three years ago. It was a global defense CTF and
that was shortly after the conflict in Ukraine. They still
hold sixty seven percent of the market share, and I
don't know, nobody really.
Speaker 1 (06:23):
Saw it coming.
Speaker 4 (06:24):
So the first ones that launched were months or years after,
and they haven't been able to dent into their market share.
They've tried lowering their costs, they've tried going active. It's
to no avail.
Speaker 1 (06:33):
Yeah, it is so crucial.
Speaker 2 (06:36):
And the Vanik one is global, so you can see
why they launched that because there is a there's a
couple of global in the US, but it was it's
the European part of that that's powering it. And then
Wisdom Tree was European specifically in the US.
Speaker 1 (06:49):
Droll you know.
Speaker 2 (06:50):
Tuttle, Matt Tuttle, We've had him on the show a
couple of times. He actually filed and launched the only
European defense ETF in the US. EUA D is the
ticker and get this it came out in October twenty
twenty four, so I actually I beat him today and
I asked them if he totally foresaw all this happening.
(07:10):
He came out before the election, so he had to picture, Okay,
Trump one would do this thing and the stocks would
go up.
Speaker 1 (07:16):
I was like, that's a lot.
Speaker 2 (07:17):
That's getting a lot, right, and he goes, well, the
way I saw it was if Trump won, this would happen.
But if Harris won, Russia would invade Europe. So he
thought that would happen on the other side. Either way,
these stocks are going up. So this is part of
why ETF issuers in a way or kind of like
active managers, they're just not betting on their own fund.
(07:39):
They're betting in the marketplace that this thing will happen,
and it could happen. And he struck, old, Joel, this
is not you know, almost a billion dollars. It is
up sixty percent in I guess since October whatever, that
would be eight months or so. Unbelievable, just perfect timing.
I mean, it's a it's a case study for the
Etfhittree books.
Speaker 3 (08:01):
So real, Like we've talked about this before, like hack
being one of the great launches, and it happened to
be their right place right time.
Speaker 1 (08:08):
Is this the new hack? Are we going to talk
about eu A d as hack.
Speaker 2 (08:14):
Hack junior hack? It need to get to about two
billion before we go. It's a new hack, but it's
well on its way. I mean again hack. I believe
it took a couple of years to get that amount,
but this is very similar to that. I would say
the robotics CTF robo was pretty similar. There's just been
a couple of these moments where I issue. Are times
(08:35):
it perfectly on the flip side. There's times where it
gets timed exactly the opposite and nobody cares. So it's
interesting to highlight these things. And that's why troll. You know,
you've got to put your line in the water before
the fish come. You know, these other issuers are coming
after the fish already ate and they're swimming off to
(08:55):
the other side.
Speaker 1 (08:55):
Of the line. It's too late.
Speaker 2 (08:56):
It's just like, you know, it is a big I
like fishing. So the metaphors is pretty good. And gotta
ya Vanak and Wisdom Tree to a degree, they were
just early with their lines in the water, with the
right bait, Okay, so.
Speaker 3 (09:16):
What about where these things end up being listed? The
filings that you mentioned, are those all US filings?
Speaker 2 (09:23):
No, the ones Henry mentioned are all already on the
market in Europe.
Speaker 1 (09:27):
So they are all all there.
Speaker 3 (09:28):
And now you know if titles in the US, like,
is the US the place for this or is it
going to be in the in Europe that's going to
attract the assets or is it just going to be
performance chasing?
Speaker 4 (09:38):
I think well, for Forman, I think there's still a
long way to go. I mean, these military expenditures are
a multi year cycles, right, I think it's just starting.
And then the the EU has what do they call it,
the re Armed Europe Plan. They announced early March and
then wasn't she was actually kind of late because they
launched in the middle of March. But I see, I
see how much do they commit hundred billion? I think
(10:01):
over whatever timeline is, it's still a lot and it's
a multi year cycle. So so for the local ones,
I would say, yes, you would, you would the place
to be would be in Europe. I'm surprised there haven't
been more launches in the US to Yeah.
Speaker 2 (10:16):
I believe there's one filed. I forget from who, But
it hasn't been the frenzy that it has in in Europe.
But Joel Henry vumright, there's a total of four million
between all.
Speaker 4 (10:26):
Of them, four billion what in the European defense, and
it was like two point six pos. So you add
the global and if you had the globals like eleven
eleven billion.
Speaker 2 (10:36):
So two billion in europe European defense and only one
billion in US European defense. That's really astonishing because normally
the US, it just has a bigger pool of money,
so whatever is popping, we will lead in assets. But
this is the rare case where Europe is possibly because
the investors here are closer to that news.
Speaker 3 (10:58):
Why do you think that is? Why? Why would there
be this much more interests?
Speaker 4 (11:03):
Well, besides the home bias, there might be some links
with the European Commission, so there might be some mandates
for your institutional investors to invest in European defense stocks
and this is the best way to do it, So
there might be that aspect to it too.
Speaker 2 (11:19):
Also, Europe's having a pretty good year overall. They're up,
the main indexes are up like twenty three percent, twenty
five percent, So I think it's got the attention of investors.
But this is updouble that, you know. So this is
like a shiny object within other shiny object. It's like
the shiniest of the shiny. The other thing is the
thing with themes is and even sectors and industries is
(11:41):
sometimes these industries get so beat up and left for dead.
It doesn't take much to go up sixty percent. You
only need a little. And this is where I give
total credit because it reminds me of the uranium ETF
that was filed after a ten year bear market. Most
issuers file after again, they're they're chasing the fish. Rarely
does somebody put their line in the water where nobody's
(12:02):
there and everybody's like left the area. It takes some
guts and maybe some vision, but that's how you can
catch a nice run, and then you can also be first.
And so I would think more issuers would try to
find spots that have been beaten up, left for dead
and nobody cares about, versus being the eighth European Defense
ETF and trying to get like a crumb. But I
(12:26):
think these issuers are going on the road, they're talking
to advisors, and I think the grassroots ask for these
ETFs is there, so like, hey, they're calling the home
office and saying, we actually need it. I gotta recommend
Wisdom Trees or we have to launch one.
Speaker 4 (12:40):
Yeah, and totally agree. I think it's also now a
initial of distribution. For example, BMP Piry BUSS came in
at number six five or six actually tracking at Bloomberg
European Defense in the decks end, they've got a forty
four million, which is astounding. They're the second large authority,
so that must be either internal assets or through their
local brick and mortar distribution, right, So it's going to
(13:03):
be all about distribution. Now, Wisdom treat does not have
physical distribution, and they've already gathered two point five billion euros.
So yeah, I think I think it's going to be
a hand to hand combat on the distribution side.
Speaker 2 (13:15):
Now, you like Joel, if you black Rock, If black
Rock launched one right now, I bet they would get
theirs even if the Tuttle one is out. That's I
think that's the point with BNP here. Some firms are
just so big and powerful they're just going to get theirs.
But the mid ones and the small ones, if they're
like third or fourth. They're almost like dead dead in
the water.
Speaker 3 (13:36):
So and Henry we talked a little bit about the
companies earlier. Are there any high flyers in here that
that are pretty ularly interesting, especially since this is, you know,
a category that's going to be investing in many of
the same companies.
Speaker 4 (13:49):
Well, they're all pretty interesting. I'm even Ryan Mattau. The
top holding from Germany, it's mixed up. I think fifteen
percent of the fund you're to date it's returned fifty percent.
And the top the top performing company was Rank an
armored vehicles company, also from Germany. It's returned ninety nine
(14:11):
percent since since March.
Speaker 2 (14:14):
Imagine being that company and you're like making your tanks
and like you're like, uh, another day at the office,
and like you read the news and the phone starts
ringing and you're like, oh my god, we don't have
enough people. That seems like what happened right.
Speaker 4 (14:31):
Like and it's it's really bringing Europe together because the
third largest holding is actually BAE that's British Aerospace something
Systems Holdings, So they're there even though the UK is
no longer part of the European Union. To just doll
part of Europe and they're they're.
Speaker 1 (14:46):
Willing to spend up for twelve percent.
Speaker 3 (14:48):
Which is I think ultimately what this goes back to
is sort of where we're talking at the beginning, Henry,
of like, if if NATO and countries are willing to
like really invest in these companies, then this actor, which
you know, maybe maybe was pretty sleeping quiet for.
Speaker 1 (15:03):
A long time, suddenly there's a lot of appetite.
Speaker 4 (15:07):
Yeah, and these are these aren't even two three year cycles,
not even five years. If we're talking ten to twenty
year cycles. Right once you put the contract in, it
takes time to plan and to develop and then to
launch a deploy right.
Speaker 3 (15:20):
Well, Henry, as long as we have you here, I
want to ask you, you know, what's it feel like
to be beating the US up for once?
Speaker 4 (15:28):
If it's good.
Speaker 2 (15:31):
That you're German?
Speaker 3 (15:32):
I'm trying to Yeah, you know, look, Henry, it's taken
forever to get to a point where Europe is outperforming
the US this year. And I know how Eric feels
about this, but I want to I want to hear
it from you. How do you how do you talk
to Eric about why Europe is different this time?
Speaker 4 (15:52):
Just look at the flows. I think Europeans are just
just had enough of putting their money all into into
the US. I think put massive amounts of money from
November all the way with you to March, and then
suddenly when terrors it, they just say, okay, wait, wait
a minute, what's going on? So you see a reverse
out of US ETF focus ETFs in April or after terrors,
(16:16):
and they're saying, well, we better get our cash back,
you know, back to our own countries.
Speaker 1 (16:20):
Now.
Speaker 2 (16:20):
Yeah, normally they invest half their money here, but this
year they've invested only three percent. That said, they better
get back on the train because the SMP has left
the station.
Speaker 1 (16:31):
Baby. That's right, all right, we'll leave it there.
Speaker 3 (16:34):
Henry, thanks so much for joining us on Trillions. Thank you,
thanks for listening to Trillions until next time. You can
find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify,
or wherever else you'd like to listen. We'd love to
hear from you. Hit us up on social I'm at
(16:54):
Joel Weber Show, He's at Eric Balcina's. Trillions is produced
by Magnus Hendrickson. Brendan Newman is our executive producer. Sage
Bauman is the head of Bloomberg Podcast.
What come Antrilliance.
Speaker 2 (00:06):
I'm Joel Webber and I'm Eric bel Cheers.
Speaker 3 (00:13):
Eric, you're in London this week and I was just there.
But we're going to have an episode where we're going
to talk about one of the big themes I think
in Europe in the world right now. But maybe you've
noticed Donald Trump, president of the US, changing a few
things in a strategic importance and how Europe defends itself
(00:35):
is going to be a really interesting area to watch.
NATO obviously the bedrock of sort of this transit Atlantic
alliance that is really created stability, geopolitical stability in the
world for sixty plus years, but there's some big questions
about what Europe can do on its own. And of
course there's an ETF specifically geared at defense in Europe
(01:00):
that's that product.
Speaker 2 (01:01):
Yeah, it's a really great product story and marketplace story
as well, because when you have thematic ETFs, sometimes you
don't know when your number is going to come up.
And European defense, I mean almost seems like an oxymoron,
not quite that far, but it was like, why would
I buy that?
Speaker 1 (01:16):
Right?
Speaker 2 (01:16):
All of a sudden, it's a hot area because they're
scrambling to get more better defense, and so all that
money is people front running the stocks. So there's an
ETF in the United States from Tuttle that already has
close to a billion dollars within a year, which is unbelievable.
And then I was in Paris and we had a
round table with some French issuers and they were all
(01:38):
talking about this mad scramble to launch homegrown European defense
ETF because the one here is a big hit. So
kind of reminds me of like couple themes in years
past where something would happen in the news and the
whole industry would just like scramble to meet the moment.
And that's what you have here with this.
Speaker 3 (01:56):
And joining us to talk through European Defense ETFs.
Speaker 1 (02:00):
It's going to be Henry Jim, an ETF analyst with.
Speaker 3 (02:03):
Bloomberg Intelligence, this time on trillions Defense Defense.
Speaker 1 (02:12):
Henry, welcome back to Trillions.
Speaker 4 (02:14):
Thank you, great to be here.
Speaker 1 (02:16):
Okay, so give us a vibe check.
Speaker 3 (02:18):
How interesting is this space having you know, kind of
been a sleepy one for a long time.
Speaker 4 (02:26):
Well, I don't know about sleepy. It just sort of
like jumped onto the stage. I've been in ETS for
a couple of decades. Now, this is probably one of
the biggest launches I've seen. The product question is the Woods'
Tree European Defense ETF WDF. It launched in March and
it's already gathered two point five billion euros. That's almost
three billion dollars, which I've never seen anything here in
(02:49):
Europe since I've been covering it.
Speaker 2 (02:51):
That's US equivalent like ten billion. I mean, that's such
a big amount of money for that. And obviously Trump
was elected in jet in November, he started to rough
things up on the NATO front like a couple months.
Speaker 1 (03:04):
After having already done that in his first term.
Speaker 2 (03:07):
True, well, what did the Wisdom Tree file right before
he was How did like, did they foresee this? You think?
Speaker 4 (03:13):
I'm sure they did. I mean, I don't know exact
timeline when they filed, but it takes about three to
four months launch. So if they launched in March, they
must have filed like back in November.
Speaker 2 (03:22):
Probably right when he won. They launched, and they had
the they have that market to themselves basically or uh kind.
Speaker 4 (03:28):
Of no, as soon as they launched, I think within
the the first month or so. The first ones came
right after them. So now we have seven seven European
defense ETFs in less than two and a half months.
Speaker 1 (03:42):
So just let's stick with w DEF for a moment.
Speaker 3 (03:47):
What did you know, What were they able to put
in this fund that got people excited?
Speaker 4 (03:53):
Oh well, it's an index tracker. To be honest, I
don't think it's exactly what they put into it. It's
still exposure. But the spolure looks pretty equitable, if not diversified.
You got like the top holding is a German company
that specialized in contract defense contracting. The top country represented France,
(04:17):
the second is UK and the second top holding is
the Italian company called Leernardo SPA, also one of the
world's largest defense contractors. So actually I think it's just exposure,
not particularly what it is. They just had a whole
smattering of European defense companies and it's a it's self interingxing,
so they developed their own deck so they had control
(04:38):
over what goes in at any time as well.
Speaker 3 (04:41):
So, Eric, when you think about a category like this
and you have an early mover like this, and how
are people going to try and distinguish their products if
there's going to be you know, seven plus of these things.
Speaker 2 (04:52):
Yeah, they'll they'll mix it up a little bit. You
see some names in most of them. I mean, I'll
be honest, I don't recognize a lot of these European names.
I mean, the one had the name SPA and I
thought it was like for vacations, but apparently that's what's
that Italian word for what for ink? Yeah, anyway, I'm
way out on my def's child. But anyway, these companies
(05:13):
are within this theme. Some will equal weight it, some
will modify equal weight it. That will change the volatility.
Some will be cheaper, some came on try to be
able to will be the low cost one. It's like
the way a category plays out over the course of
like three years. This category played out in the course
of like three months, with everybody trying to angle a
little differently. But it really is a story of first
(05:35):
to market. And this is why we talk about first
market is so important and why people file stuff that
seems a little crazy or ahead of its time, because
if you are first to market and you hit it
right at the right time, it's really tough for any
competitor to eat into your assets, even if they do
have better performance, better costs. Right are you finding that here.
(05:57):
What percent of the total europe defense theme does the
wisdom Tree one have?
Speaker 4 (06:04):
Oh well, currently it's ninety ninety three. Yeah. I think
a comparable is the van Neck brought it to launch
three years ago. It was a global defense CTF and
that was shortly after the conflict in Ukraine. They still
hold sixty seven percent of the market share, and I
don't know, nobody really.
Speaker 1 (06:23):
Saw it coming.
Speaker 4 (06:24):
So the first ones that launched were months or years after,
and they haven't been able to dent into their market share.
They've tried lowering their costs, they've tried going active. It's
to no avail.
Speaker 1 (06:33):
Yeah, it is so crucial.
Speaker 2 (06:36):
And the Vanik one is global, so you can see
why they launched that because there is a there's a
couple of global in the US, but it was it's
the European part of that that's powering it. And then
Wisdom Tree was European specifically in the US.
Speaker 1 (06:49):
Droll you know.
Speaker 2 (06:50):
Tuttle, Matt Tuttle, We've had him on the show a
couple of times. He actually filed and launched the only
European defense ETF in the US. EUA D is the
ticker and get this it came out in October twenty
twenty four, so I actually I beat him today and
I asked them if he totally foresaw all this happening.
(07:10):
He came out before the election, so he had to picture, Okay,
Trump one would do this thing and the stocks would
go up.
Speaker 1 (07:16):
I was like, that's a lot.
Speaker 2 (07:17):
That's getting a lot, right, and he goes, well, the
way I saw it was if Trump won, this would happen.
But if Harris won, Russia would invade Europe. So he
thought that would happen on the other side. Either way,
these stocks are going up. So this is part of
why ETF issuers in a way or kind of like
active managers, they're just not betting on their own fund.
(07:39):
They're betting in the marketplace that this thing will happen,
and it could happen. And he struck, old, Joel, this
is not you know, almost a billion dollars. It is
up sixty percent in I guess since October whatever, that
would be eight months or so. Unbelievable, just perfect timing.
I mean, it's a it's a case study for the
Etfhittree books.
Speaker 3 (08:01):
So real, Like we've talked about this before, like hack
being one of the great launches, and it happened to
be their right place right time.
Speaker 1 (08:08):
Is this the new hack? Are we going to talk
about eu A d as hack.
Speaker 2 (08:14):
Hack junior hack? It need to get to about two
billion before we go. It's a new hack, but it's
well on its way. I mean again hack. I believe
it took a couple of years to get that amount,
but this is very similar to that. I would say
the robotics CTF robo was pretty similar. There's just been
a couple of these moments where I issue. Are times
(08:35):
it perfectly on the flip side. There's times where it
gets timed exactly the opposite and nobody cares. So it's
interesting to highlight these things. And that's why troll. You know,
you've got to put your line in the water before
the fish come. You know, these other issuers are coming
after the fish already ate and they're swimming off to
(08:55):
the other side.
Speaker 1 (08:55):
Of the line. It's too late.
Speaker 2 (08:56):
It's just like, you know, it is a big I
like fishing. So the metaphors is pretty good. And gotta
ya Vanak and Wisdom Tree to a degree, they were
just early with their lines in the water, with the
right bait, Okay, so.
Speaker 3 (09:16):
What about where these things end up being listed? The
filings that you mentioned, are those all US filings?
Speaker 2 (09:23):
No, the ones Henry mentioned are all already on the
market in Europe.
Speaker 1 (09:27):
So they are all all there.
Speaker 3 (09:28):
And now you know if titles in the US, like,
is the US the place for this or is it
going to be in the in Europe that's going to
attract the assets or is it just going to be
performance chasing?
Speaker 4 (09:38):
I think well, for Forman, I think there's still a
long way to go. I mean, these military expenditures are
a multi year cycles, right, I think it's just starting.
And then the the EU has what do they call it,
the re Armed Europe Plan. They announced early March and
then wasn't she was actually kind of late because they
launched in the middle of March. But I see, I
see how much do they commit hundred billion? I think
(10:01):
over whatever timeline is, it's still a lot and it's
a multi year cycle. So so for the local ones,
I would say, yes, you would, you would the place
to be would be in Europe. I'm surprised there haven't
been more launches in the US to Yeah.
Speaker 2 (10:16):
I believe there's one filed. I forget from who, But
it hasn't been the frenzy that it has in in Europe.
But Joel Henry vumright, there's a total of four million
between all.
Speaker 4 (10:26):
Of them, four billion what in the European defense, and
it was like two point six pos. So you add
the global and if you had the globals like eleven
eleven billion.
Speaker 2 (10:36):
So two billion in europe European defense and only one
billion in US European defense. That's really astonishing because normally
the US, it just has a bigger pool of money,
so whatever is popping, we will lead in assets. But
this is the rare case where Europe is possibly because
the investors here are closer to that news.
Speaker 3 (10:58):
Why do you think that is? Why? Why would there
be this much more interests?
Speaker 4 (11:03):
Well, besides the home bias, there might be some links
with the European Commission, so there might be some mandates
for your institutional investors to invest in European defense stocks
and this is the best way to do it, So
there might be that aspect to it too.
Speaker 2 (11:19):
Also, Europe's having a pretty good year overall. They're up,
the main indexes are up like twenty three percent, twenty
five percent, So I think it's got the attention of investors.
But this is updouble that, you know. So this is
like a shiny object within other shiny object. It's like
the shiniest of the shiny. The other thing is the
thing with themes is and even sectors and industries is
(11:41):
sometimes these industries get so beat up and left for dead.
It doesn't take much to go up sixty percent. You
only need a little. And this is where I give
total credit because it reminds me of the uranium ETF
that was filed after a ten year bear market. Most
issuers file after again, they're they're chasing the fish. Rarely
does somebody put their line in the water where nobody's
(12:02):
there and everybody's like left the area. It takes some
guts and maybe some vision, but that's how you can
catch a nice run, and then you can also be first.
And so I would think more issuers would try to
find spots that have been beaten up, left for dead
and nobody cares about, versus being the eighth European Defense
ETF and trying to get like a crumb. But I
(12:26):
think these issuers are going on the road, they're talking
to advisors, and I think the grassroots ask for these
ETFs is there, so like, hey, they're calling the home
office and saying, we actually need it. I gotta recommend
Wisdom Trees or we have to launch one.
Speaker 4 (12:40):
Yeah, and totally agree. I think it's also now a
initial of distribution. For example, BMP Piry BUSS came in
at number six five or six actually tracking at Bloomberg
European Defense in the decks end, they've got a forty
four million, which is astounding. They're the second large authority,
so that must be either internal assets or through their
local brick and mortar distribution, right, So it's going to
(13:03):
be all about distribution. Now, Wisdom treat does not have
physical distribution, and they've already gathered two point five billion euros.
So yeah, I think I think it's going to be
a hand to hand combat on the distribution side.
Speaker 2 (13:15):
Now, you like Joel, if you black Rock, If black
Rock launched one right now, I bet they would get
theirs even if the Tuttle one is out. That's I
think that's the point with BNP here. Some firms are
just so big and powerful they're just going to get theirs.
But the mid ones and the small ones, if they're
like third or fourth. They're almost like dead dead in
the water.
Speaker 3 (13:36):
So and Henry we talked a little bit about the
companies earlier. Are there any high flyers in here that
that are pretty ularly interesting, especially since this is, you know,
a category that's going to be investing in many of
the same companies.
Speaker 4 (13:49):
Well, they're all pretty interesting. I'm even Ryan Mattau. The
top holding from Germany, it's mixed up. I think fifteen
percent of the fund you're to date it's returned fifty percent.
And the top the top performing company was Rank an
armored vehicles company, also from Germany. It's returned ninety nine
(14:11):
percent since since March.
Speaker 2 (14:14):
Imagine being that company and you're like making your tanks
and like you're like, uh, another day at the office,
and like you read the news and the phone starts
ringing and you're like, oh my god, we don't have
enough people. That seems like what happened right.
Speaker 4 (14:31):
Like and it's it's really bringing Europe together because the
third largest holding is actually BAE that's British Aerospace something
Systems Holdings, So they're there even though the UK is
no longer part of the European Union. To just doll
part of Europe and they're they're.
Speaker 1 (14:46):
Willing to spend up for twelve percent.
Speaker 3 (14:48):
Which is I think ultimately what this goes back to
is sort of where we're talking at the beginning, Henry,
of like, if if NATO and countries are willing to
like really invest in these companies, then this actor, which
you know, maybe maybe was pretty sleeping quiet for.
Speaker 1 (15:03):
A long time, suddenly there's a lot of appetite.
Speaker 4 (15:07):
Yeah, and these are these aren't even two three year cycles,
not even five years. If we're talking ten to twenty
year cycles. Right once you put the contract in, it
takes time to plan and to develop and then to
launch a deploy right.
Speaker 3 (15:20):
Well, Henry, as long as we have you here, I
want to ask you, you know, what's it feel like
to be beating the US up for once?
Speaker 4 (15:28):
If it's good.
Speaker 2 (15:31):
That you're German?
Speaker 3 (15:32):
I'm trying to Yeah, you know, look, Henry, it's taken
forever to get to a point where Europe is outperforming
the US this year. And I know how Eric feels
about this, but I want to I want to hear
it from you. How do you how do you talk
to Eric about why Europe is different this time?
Speaker 4 (15:52):
Just look at the flows. I think Europeans are just
just had enough of putting their money all into into
the US. I think put massive amounts of money from
November all the way with you to March, and then
suddenly when terrors it, they just say, okay, wait, wait
a minute, what's going on? So you see a reverse
out of US ETF focus ETFs in April or after terrors,
(16:16):
and they're saying, well, we better get our cash back,
you know, back to our own countries.
Speaker 1 (16:20):
Now.
Speaker 2 (16:20):
Yeah, normally they invest half their money here, but this
year they've invested only three percent. That said, they better
get back on the train because the SMP has left
the station.
Speaker 1 (16:31):
Baby. That's right, all right, we'll leave it there.
Speaker 3 (16:34):
Henry, thanks so much for joining us on Trillions. Thank you,
thanks for listening to Trillions until next time. You can
find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify,
or wherever else you'd like to listen. We'd love to
hear from you. Hit us up on social I'm at
(16:54):
Joel Weber Show, He's at Eric Balcina's. Trillions is produced
by Magnus Hendrickson. Brendan Newman is our executive producer. Sage
Bauman is the head of Bloomberg Podcast.
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