WEDF Has a Bright Future

Core Insights - Increased defense and national security spending is a prominent theme in 2023, expanding beyond traditional leaders like the U.S., China, and Russia, with Europe significantly increasing its defense budget [1][2] Group 1: European Defense Spending Trends - The WisdomTree Europe Defense Fund (WDEF) debuted in July and tracks the WisdomTree Europe Defense Index, capitalizing on the surge in European defense spending expected to continue into the next decade [2][3] - European NATO members are under pressure from the U.S. to increase their defense budgets, influenced by the ongoing Russia/Ukraine conflict, which is nearing its fourth year [3][6] - The total addressable market for European defense spending is projected to grow by 29% annually until 2030, with a target of 3% of GDP allocated to defense spending by that year [5] Group 2: Market Opportunities and Valuation - European defense stocks have shown significant growth in 2025, and the sector is considered attractive in terms of valuation and growth prospects compared to other European equity sectors [5] - Policy-level commitments from various governments in Europe indicate a long-term dedication to increased defense expenditures, which could benefit firms within the WDEF [6] Group 3: Strategic Financial Framework - The European Commission's proposed Multiannual Financial Framework for 2028-2034 includes a budget of €2 trillion aimed at enhancing the EU's strategic autonomy and resilience, which is 1.26% of EU GDP over the seven-year period [7]