Global defence and armaments IT

[TheMotorcycleBoy]

Morning folks,

Up to now, I've avoided any shares in defence and armaments firms. Not for any ethical reasons, but as I've naively argued with my father (who's held LON:BAE for a yonks), I didn't see war as a "growth industry". In the light of recent events, whilst still hoping that war is not something that will grow on us all, it would be appear that many countries across the globe will be increasing military spending.

Since this isn't an area that I want to spend ages doing research on, and since defensive/offensive weaponry takes many forms, I'd much sooner invest in an IT, preferably a dividend paying one, rather than take on any company specific risk.

Can anyone on here make any suggestions of ITs offering exposure to the global armaments industry?

thanks Matt

[DrFfybes]

I've not really looked, as I had a similar thought when it all kicked off and sae BAE was up 25% overnight, so the ship had sailed.

There may be further growth in the sector, but should anything happening to Putin I expect pretty spectacular falls again.

Paul

[Lootman]

I have held defence shares for a long time. To me, it is the ultimate "defensive" sector. We can have years of peace but then something always flares up somewhere, because of all the tinpot dictators around the world. And these shares get an immediate boost.

I have favoured US firms since the US military has a strong preference, and sometimes a rule, that it doesn't buy foreign arms (with exceptions). And American spending on defence dwarfs other nations.

I am not familiar with a defence ETF although I feel sure they exist. But in looking at the holdings I would expect to see large positions in the US heavyweight names, below. If it doesn't hold much of those then I would instead buy these individual names:

Lockheed Martin
Northrop Grumman
Raytheon
General Dynamics

Boeing has a big defence business but of course having problems on the civil side so less of a need to hold that.

[monabri]

Googled

iShares US Aerospace & Defense (ITA)
Invesco Aerospace & Defense ETF (PPA)
SPDR S&P Aerospace & Defense ETF (XAR)

snippet:

https://www.etftrends.com/defense-etfs- ... o-ukraine/

[TheMotorcycleBoy]

Googled

iShares US Aerospace & Defense (ITA)
Invesco Aerospace & Defense ETF (PPA)
SPDR S&P Aerospace & Defense ETF (XAR)

snippet:

https://www.etftrends.com/defense-etfs- ... o-ukraine/

Thanks. Yes all that I have found so far are ETFs. Not come across any ITs yet.

Perhaps ITs are a UK phenomenon, whereas ETFs are global?

Matt

[SalvorHardin]

Thanks. Yes all that I have found so far are ETFs. Not come across any ITs yet.

Perhaps ITs are a UK phenomenon, whereas ETFs are global?

Yes, Investment Trusts are pretty much restricted to Britain and Japan. The rest of the world uses closed-end funds or investment companies which don't have the tax advantage of investment trusts.

The big tax advantage of Investment Trusts is that they don't pay capital gains tax upon realised capital gains.

American closed-end funds have a horrible tax disadvantage for their shareholders. Their shareholders are liable for capital gains tax upon capital gains generated within the closed end fund (shareholders get an end of year summary of the realised gains upon which they are then taxed).

[mc2fool]

Googled

iShares US Aerospace & Defense (ITA)
Invesco Aerospace & Defense ETF (PPA)
SPDR S&P Aerospace & Defense ETF (XAR)

snippet:

https://www.etftrends.com/defense-etfs- ... o-ukraine/

Thanks. Yes all that I have found so far are ETFs. Not come across any ITs yet.

Perhaps ITs are a UK phenomenon, whereas ETFs are global?

Uh? Well, yes, as explained above, the particular tax status of "investment trust" is a UK (and I didn't know, Japan) thing, but that, in itself, is irrelevant to their "globalness" for an investor wanting to invest in a (any) global sector. ITs can invest in pretty much whatever they like anywhere in the world, and indeed very many do.

Some even have "global" in their names, e.g. Polar Capital Global Healthcare, HarbourVest Global Private Equity, BMO Global Smaller Companies, etc, but that's just a name and doesn't make them any more (or less) "global" than generalists like, say, Alliance Trust or F&C or many others without that word.

It just so happens that there aren't any ITs -- or, it seems, any UK active collectives (not OEICs or UTs either) -- that are specifically focussed on investing in defence and/or armaments, global or not. There also aren't any tobacco ITs/OEICs/UTs, or for that matter, any aviation ones, and there's undoubtedly lots of other "missing" specific sector/industry active funds. Presumably the marketeers think they wouldn't be worth it (for them, of course...)

[TheMotorcycleBoy]

Googled

iShares US Aerospace & Defense (ITA)
Invesco Aerospace & Defense ETF (PPA)
SPDR S&P Aerospace & Defense ETF (XAR)

snippet:

https://www.etftrends.com/defense-etfs- ... o-ukraine/

Thanks. Yes all that I have found so far are ETFs. Not come across any ITs yet.

Perhaps ITs are a UK phenomenon, whereas ETFs are global?

Uh? Well, yes, as explained above, the particular tax status of "investment trust" is a UK (and I didn't know, Japan) thing, but that, in itself, is irrelevant to their "globalness" for an investor wanting to invest in a (any) global sector. ITs can invest in pretty much whatever they like anywhere in the world, and indeed very many do.

Some even have "global" in their names, e.g. Polar Capital Global Healthcare, HarbourVest Global Private Equity, BMO Global Smaller Companies, etc, but that's just a name and doesn't make them any more (or less) "global" than generalists like, say, Alliance Trust or F&C or many others without that word.

It just so happens that there aren't any ITs -- or, it seems, any UK active collectives (not OEICs or UTs either) -- that are specifically focussed on investing in defence and/or armaments, global or not. There also aren't any tobacco ITs/OEICs/UTs, or for that matter, any aviation ones, and there's undoubtedly lots of other "missing" specific sector/industry active funds. Presumably the marketeers think they wouldn't be worth it (for them, of course...)

Thanks. You make some interesting points.

BTW I'm still umming and ahhing this investment TBH. I'm thinking that I've missed the boat a little. However maybe I need a longer term approach to this sector.

Matt

[DavidM13]

Yes. Looking at underlying holdings, I see no more than 6.7% in any investment company that invests in Aerospace and Defence.

[TheMotorcycleBoy]

Thanks. You make some interesting points.

BTW I'm still umming and ahhing this investment TBH. I'm thinking that I've missed the boat a little. However maybe I need a longer term approach to this sector.

Matt

SAAB might be of interest with the imminently-expected application of Sweden into NATO. Could lead to a structural change in how much of the NATO market SAAB has access to.

Indeed SAAB maketh the NLAW apparently.

https://www.saab.com/products/nlaw

What would be nice, would an ETF or an IT that is composed of all the Euro, UK and Yank firms making all this type of stuff. I don't currently believe such a beast exists - I did briefly inspect the core holdings in the those list earlier by monabri here viewtopic.php?p=497427#p497427. However I could only find the Yanks.

Matt

[mc2fool]

What would be nice, would an ETF or an IT that is composed of all the Euro, UK and Yank firms making all this type of stuff. I don't currently believe such a beast exists - I did briefly inspect the core holdings in the those list earlier by monabri here viewtopic.php?p=497427#p497427. However I could only find the Yanks.

Not only do those ETFs only invest in US companies, they are US listed ETFs, which means you can't buy them here anyway. viewtopic.php?p=495689#p495689

On a quick look through https://www.justetf.com/uk/etf-list-overview.html, which I believe lists all ETFs available in the UK, I think you're out of luck, as I can't find anything that matches.

[TheMotorcycleBoy]

Thanks. You make some interesting points.

BTW I'm still umming and ahhing this investment TBH. I'm thinking that I've missed the boat a little. However maybe I need a longer term approach to this sector.

Matt

SAAB might be of interest with the imminently-expected application of Sweden into NATO. Could lead to a structural change in how much of the NATO market SAAB has access to.

Yeah. There looks to be massive potential for downside in their SP however. They've risen 76% since the invasion of Ukraine.

Matt

[SalvorHardin]

Thanks. You make some interesting points.

BTW I'm still umming and ahhing this investment TBH. I'm thinking that I've missed the boat a little. However maybe I need a longer term approach to this sector.

Matt

SAAB might be of interest with the imminently-expected application of Sweden into NATO. Could lead to a structural change in how much of the NATO market SAAB has access to.

Yeah. There looks to be massive potential for downside in their SP however. They've risen 76% since the invasion of Ukraine.

You could always try Thales (French). They make the NLAW (they own Shorts) and the Starstreak SAM. I bought some Thales shares shortly after war broke out, up 38% since then.

Someone I know offline got a bit annoyed last month when he ran into me on one of my walks around town, when he asked if I'd been buying any shares following the invasion. I said that in addition to Farmland Partners (American farmland) I'd bought AeroVironment because they're big in drones (they make the Switchblade) and Thales because of the NLAW. I was accused of making money out of war. Not long afterwards, via a mutual friend, I sent him a copy of the uncensored video from Bucha (this was about 36 hours before our media picked up on it). I heard that he has since bought some Thales shares. As the sayings go: "[expletive deleted] of Democracy" and "Peace through superior firepower"

[TheMotorcycleBoy]

Thanks. You make some interesting points.

BTW I'm still umming and ahhing this investment TBH. I'm thinking that I've missed the boat a little. However maybe I need a longer term approach to this sector.

Matt

SAAB might be of interest with the imminently-expected application of Sweden into NATO. Could lead to a structural change in how much of the NATO market SAAB has access to.

Yeah. There looks to be massive potential for downside in their SP however. They've risen 76% since the invasion of Ukraine.

You could always try Thales (French). They make the NLAW (they own Shorts) and the Starstreak SAM. I bought some Thales shares shortly after war broke out, up 38% since then.

This link suggests that SAAB make the NLAW

https://www.saab.com/products/nlaw

I'm confused!

Someone I know offline got a bit annoyed last month when he ran into me on one of my walks around town, when he asked if I'd been buying any shares following the invasion. I said that in addition to Farmland Partners (American farmland) I'd bought AeroVironment because they're big in drones (they make the Switchblade) and Thales because of the NLAW. I was accused of making money out of war. Not long afterwards, via a mutual friend, I sent him a copy of the uncensored video from Bucha (this was about 36 hours before our media picked up on it). I heard that he has since bought some Thales shares. As the sayings go: "[expletive deleted] of Democracy" and "Peace through superior firepower"

I know what you mean. My attitude has changed somewhat since this Ukraine situation. It's kinda sad, but still a reflection on the human condition.

Matt

[SalvorHardin]

This link suggests that SAAB make the NLAW

https://www.saab.com/products/nlaw

I'm confused!

It's a bit confusing because Saab and Thales both make NLAWs. A variety of subcontractors make various components and Saab also makes the warheads.

https://en.m.wikipedia.org/wiki/NLAW

[Lootman]

Someone I know offline got a bit annoyed last month when he ran into me on one of my walks around town, when he asked if I'd been buying any shares following the invasion. I said that in addition to Farmland Partners (American farmland) . .

I recall back in the 1980s when Chernobyl happened, one of our traders instantly went huge on wheat futures and made a killing. When everyone else was acting horrified, he stayed cool and made bank.

Upon the invasion I bought several Ag names: Mosaic, Nutrien, Corteva, ADM and Agro, and they are all up 20% to 50% in a couple of months.

War is opportunity.

[TheMotorcycleBoy]

OOI, I have just requested that the OT posts get relocated under the Portfolio management board, into a new thread called the "TheMotorcycleBoy's portfolio trilemma".

Matt

PS Apparently trilemma is a real word https://en.wikipedia.org/wiki/Trilemma !!

[mc2fool]

OOI, I have just requested that the OT posts get relocated under the Portfolio management board, into a new thread called the "TheMotorcycleBoy's portfolio trilemma".

Matt

PS Apparently trilemma is a real word https://en.wikipedia.org/wiki/Trilemma !!

Why stop there? https://en.wiktionary.org/wiki/quadrilemma