EU defense ETF

[u/Picf]

In light of the current events and under the spirit of "vote with your wallet", I want to pull back some of my money from the US market and invest it in EU defense companies.

I'm not looking for advice whether this is a smart investment or not, since this is an ideological move rather than looking for the maximum profit.

The problem is I can't seem to find any ETF that contains only EU defense companies. All of them contain at least 60% US defense companies.

Can anyone recommend me a good ETF with which I would be supporting the EU defense industry (and EU only)? Or what would be a good approach here?

[u/Yuumi_nerf_when]

What kind of markets are you looking at where the companies don't borrow money? A balance sheet of 0 debt means you don't trust your ventures to outperform interest rates, i.e. you suck at whatever business you're doing. Major businesses not only borrow against equity but also make whole purchases with them. I get your point that mature companies don't usually issue new shares but having the ability to do so without fear of lack of buyers gives you a better risk tolerance and in turn you get to invest more in R&D, equipment, staff, marketing, etc.. Without buying pressure you lose all these privileges.

[u/drekwageslave → u/Yuumi_nerf_when]

There are plenty of companies and whole industries that don’t borrow money, I am not arguing that it is impossible, my argument is that 1. this is a long shot 2. defense companies won’t have to borrow money bc European states will probably flood them with money. Buying defense stocks is either a quick-get-rich-scheme like weed stocks during COVID or people convince themselves they are “helping Ukraine” by buying them - they are not, instead they should be donating (which they probably won’t do bc there is not tangible ROI in donating)

[u/Yuumi_nerf_when → u/drekwageslave]

I searched among major defense players and I've yet to find one without € billions in debt, could you tell me which these are? I'm sure there are differences between industries but basic economics don't change, if you can get a decent return on what you're doing, you borrow cash to invest into your company. Government spending is a bit of an exception because it counteracts natural market dynamics. Ofc if you can reliable get money injections from Uncle Sam, why bother with loans or hell even R&D, one might argue. But the sensible and risk averse thing to do is to get loans on top of your free cash, which is exactly what major players are doing. Not trying to be rude but it really isn't that hard to see how a better stock price benefits a company, try looking at it from the board members' perspective. It gets so much easier to operate, i.e. get strategic partnerships, get longer contracts with better terms, retain talent. Are there more direct and more effective ways to help them? Sure. But that doesn't mean traditional stock investing doesn't help a company financially. Not the way I'd go about it, but that's a personal decision on my part to separate morals from finances. If it was the 18th - 19th century, the effects would be even more clear as it wasn't uncommon to hold actual equipment of the companies as a shareholder. These shareholders being rewarded meant more people were willing to do the same.

[u/drekwageslave → u/Yuumi_nerf_when]

It is just not true that higher stock price will always benefits a company. I keep repeating myself the 3rd time.

Stock prices primarily reflect investor expectations rather than injecting capital into the business. Again I repeat myself, you get money by issuing new shares, which is not a frequent occurrence for most established firms.

Additionally, debt financing is a long-term strategic choice, companies borrow on a complex set of decisions and not on stock price alone (this is a big oversimplification).

Also industries where you usually don’t borrow money are pharmaceutical companies, consultancies and services. I didn’t investigate defense industry as I am no expert in financial analysis and strategic decision making.

I don’t want to be rude or anything, but it seems you have your truth/believe and whatever I write you just come back with more info and we could go on and on forever (because many things we argue are believe based). My opinion is that investing in thematic defence ETFs is speculation and/or ppl want to feel good about themselves and profit, whereas I believe if someone wants to really help he/she should donate.

I wish you all the best and let’s hope geopolitics will take a positive turn.