Core Insights - The ETF industry continues to thrive, with $1.5 trillion in 2025 and $103 billion in new money gathered by January 21, 2026 [1] Actively Managed ETFs - Actively managed ETFs, despite being over 10% of ETF assets, captured nearly one-third of all ETF inflows in 2025 and 37% of new money in 2026 [2] - Active fixed income ETFs were particularly popular, with the PIMCO Multisector Bond Active ETF (PYLD) leading with $1.0 billion in new money [3] Thematic ETFs - Thematic ETFs saw a resurgence with $23 billion in inflows after three years of outflows, primarily driven by robotics and AI [4] - The Global X Defense Tech ETF (SHLD) attracted $685 million in early 2026, reflecting ongoing geopolitical tensions [4] - The REX Drones ETF (DRNZ) launched in late 2025, quickly reaching $55 million in assets and gaining 28% [5] Diversification Trends - The Invesco S&P 500 Equal Weight ETF (RSP) emerged as a leader in 2026, gathering $4.5 billion and outperforming mega-cap ETFs [7] - RSP had significant net outflows in 2025 but benefited from a shift towards moderately sized large-caps in 2026 [8] Sector Performance - The State Street Financial Select Sector SPDR ETF (XLF) regained favor in 2026, gathering $3.2 billion, driven by strong quarterly results from major US banks [9]

Core Insights - The Global X Defense Tech ETF (SHLD) represents a significant shift in the defense industry, moving away from traditional heavy industry towards the high-margin area of software-defined warfare [1] Group 1: Industry Overview - The ETF's portfolio emphasizes companies that are innovating in software-defined warfare, indicating a trend towards technology-driven solutions in defense [1] Group 2: Investment Focus - The focus on high-margin sectors suggests potential for greater profitability and growth within the defense technology space [1]

Core Insights - The defense sector has shown remarkable resilience and outperformance in 2025, driven by global conflicts and increased NATO spending, contrasting with broader market volatility [1][9] - The upcoming fourth-quarter earnings season is expected to validate the conversion of government contracts into tangible growth and shareholder value for defense companies [2] Defense Sector Performance - Defense stocks are benefiting from significant upward revisions in global military spending, with NATO committing to 5% of GDP on defense by 2035 and notable increases in defense budgets from countries like India and China [3][4] - Lockheed Martin (LMT) has raised its 2025 sales outlook, indicating strong sales expectations for the fourth quarter, supported by a growing backlog of orders [5] Technological Advancements - The rise of AI and technology adoption in defense, including cybersecurity and sensor systems, is driving revenue growth for diversified defense companies like L3Harris Technologies (LHX) and RTX Corp. (RTX) [6] - This tech-driven growth provides stability and protection against broader market volatility, making defense ETFs attractive for investors [6] Earnings Expectations - The Aerospace sector, which includes defense stocks, is projected to report earnings growth of 63.6% with a revenue increase of 12.2%, significantly outpacing the overall S&P 500 earnings growth of 8.7% [8] Defense ETFs Overview - The following defense ETFs are highlighted for their potential to benefit from the expected strong quarterly results: - **Global X Defense Tech ETF (SHLD)**: Net assets of $6.98 billion, top holdings include LMT (8.38%), RTX (7.54%), and General Dynamics (GD) (7.19%), with a 91.1% increase over the past year [10] - **SPDR S&P Aerospace & Defense ETF (XAR)**: Net assets of $5.95 billion, top holdings include Karman Holdings (4.70%), Rocket Lab (4.33%), and Kratos Defense (4.19%), with a 60.3% increase over the past year [11] - **iShares U.S. Aerospace & Defense ETF (ITA)**: Net assets of $14.84 billion, top holdings include GE Aerospace (19.88%), RTX (15.67%), and Boeing (8.44%), with a 51.4% increase over the past year [12] - **Invesco Aerospace & Defense ETF (PPA)**: Market value of $7.88 billion, top holdings include Boeing (9.11%), RTX (8.40%), and LMT (8.20%), with a 45.9% increase over the past year [13]

Group 1 - The Global X Defense Tech ETF (SHLD) has reached a 52-week high and is up 105.98% from its 52-week low price of $36.61 per share, indicating strong momentum for investors [1] - The fund aims to provide exposure to defense technology companies that benefit from technology, services, systems, and hardware catering to the defense and military sector, with an annual fee of 50 basis points [1] - The Aerospace and Defense sector is gaining attention due to a complicated geopolitical landscape, including U.S. military actions in Syria and Venezuela, which highlight rising global instability [2] Group 2 - Ongoing tensions in the Middle East and Asia, along with President Trump's proposal for a $1.5 trillion U.S. military budget by 2027, enhance the strategic appeal of Aerospace and Defense funds [3] - SHLD is expected to maintain strong performance in the near term, supported by a positive weighted alpha of 93.65, suggesting potential for further gains [4]

Geopolitical Landscape and Defense Spending - Recent U.S. military operations in Venezuela and Trump's focus on acquiring Greenland indicate a fragile geopolitical landscape, supporting higher defense spending [1] - Trump proposed a $1.5 trillion military budget for 2027, significantly up from the current $901 billion [2] Defense Stocks Performance - The proposal for increased military spending led to a rebound in defense stocks, with Northrop Grumman, Lockheed Martin, and RTX Corporation seeing gains of 2.39%, 4.34%, and 0.78% respectively [3] Budget Concerns and Debt Implications - The proposed military budget increase requires congressional authorization, raising concerns about U.S. debt, which is currently around $38 trillion [4][5] Defense Sector Outlook - The S&P 500 Aerospace & Defense Index has increased by 59.87% over the past year, outperforming the broader S&P 500, which rose by 16.95% [6] - Global defense spending is projected to exceed $3.6 trillion by 2030, a 33% increase from 2024 levels, supported by robust order pipelines and modernization efforts [7] Investment Opportunities in ETFs - Investing in Aerospace and Defense ETFs is recommended due to their strong performance during heightened military activity [8] - Suggested ETFs include iShares U.S. Aerospace & Defense ETF (ITA), Invesco Aerospace & Defense ETF (PPA), and Global X Defense Tech ETF (SHLD) [9] Cybersecurity Sector Growth - The rise in geopolitical tensions has highlighted the importance of cybersecurity, with the global defense cybersecurity market expected to grow at a CAGR of 16.1%, reaching $63.38 billion by 2032 [12][14] - Recommended cybersecurity ETFs include First Trust NASDAQ Cybersecurity ETF (CIBR) and Amplify Cybersecurity ETF (HACK) [14] Artificial Intelligence in Defense - AI is becoming central to military strategy, enhancing real-time data processing and decision-making, with potential benefits for AI-related firms from increased military budgets [15][16] Manufacturing and Space ETFs - Manufacturing ETFs may benefit from Trump's push for increased production in defense companies, with suggested funds including Industrial Select Sector SPDR Fund (XLI) [17] - The evolution of warfare is driving investment in space-based systems, with recommended space ETFs like Procure Space ETF (UFO) and ARK Space & Defense Innovation ETF (ARKX) [18][19]

Core Insights - Advisors have shown a strong preference for ETFs this year, with 168 ETFs experiencing over 90% growth in advisor adoption, highlighting their tax efficiency and the need for issuers to maintain advisor interest [2][6]. ETF Performance - The top-performing ETFs this year include those tracking artificial intelligence and cryptocurrency, particularly Ethereum, as well as fixed-income and high-income opportunities, reflecting investor engagement in these sectors [4]. - The iShares AI Innovation and Tech Active ETF (BAI) increased by 23%, while the Global X Defense Tech ETF (SHLD) saw a significant rise of 75%. Conversely, the iShares Ethereum Trust ETF (ETHA) experienced a decline of 15% [7]. Market Dynamics - Despite the overall comfort with ETFs among advisors, there remains a significant number of ETFs (325) that did not see increased adoption, representing about 8% of the 4,000 ETFs tracked by AdvizorPro, indicating the necessity for targeted marketing strategies [6]. - The mixed performance among the top five strategies suggests that while some ETFs are thriving, others are struggling to gain traction in the market [5].

Core Insights - The launch of Drone ETFs by REX Shares and Defiance indicates a growing interest in the aerospace defense sector, which generated $922 billion in global revenue last year [2] - The aerospace defense industry is experiencing significant growth, with some ETFs in this sector up by 40% or more year to date [2] - Global military expenditures reached $2.7 trillion last year, marking a 9.4% increase from 2023, contributing to rising profit margins for companies involved in drone and military technology [3] Industry Overview - The Drone ETF (DRNZ) allocates 80% of its portfolio to companies profiting from drones or unmanned aerial vehicles (UAVs) [2] - The Drone & Modern Warfare ETF (JEDI) focuses on military technology companies and is concentrated in aerospace defense [2] - Major companies in the drone and aerospace sector include Boeing, Lockheed Martin, and RTX Corporation, which have diversified business lines beyond defense [3] Investment Considerations - Analysts suggest that drone ETFs represent a niche within the broader aerospace and defense theme, with potential for high volatility [3] - The iShares U.S. Aerospace & Defense ETF (ITA) is up 46% year to date, Invesco's Aerospace & Defense ETF (PPA) is up 35%, and the Global X Defense Tech ETF (SHLD) is up 79% year to date [4]

Core Insights - Thematic ETFs are designed to capture long-term investment themes that are not fully represented by traditional market or sector approaches, utilizing quantifiable measures like revenue and market share to identify key players [1] - Thematic investing remains popular as investors seek exposure to emerging trends, with global flows into thematic ETFs exceeding $21 billion year-to-date, marking the strongest inflows since 2021 [2] Thematic Categories Defense - The Select STOXX Europe Aerospace & Defense ETF (EUAD) leads the U.S. defense category with a year-to-date return of 84.8%, followed closely by the Global X Defense Tech ETF (SHLD) at 82.5% [4] - Notable ETFs in the defense sector include: - EUAD: Total Assets $1.24 billion, YTD Return 84.82%, Expense Ratio 0.50% [5] - SHLD: Total Assets $5.33 billion, YTD Return 82.46%, Expense Ratio 0.50% [5] - NATO: Total Assets $62.78 million, YTD Return 51.59%, Expense Ratio 0.35% [5] Artificial Intelligence - The Roundhill Generative AI & Technology ETF (CHAT) is the top performer in the AI-themed ETFs with a YTD return of 53.6%, nearing $1 billion in assets [6] - Other significant AI ETFs include: - CHAT: Total Assets $959.31 million, YTD Return 53.61%, Expense Ratio 0.75% [7] - AIS: Total Assets $74.82 million, YTD Return 52.29%, Expense Ratio 0.75% [7] Infrastructure - The iShares Emerging Markets Infrastructure ETF (EMIF) leads the infrastructure category with a YTD return of 23.6% [8] - Key infrastructure ETFs include: - EMIF: Total Assets $7.61 million, YTD Return 23.63%, Expense Ratio 0.60% [8] - INFR: Total Assets $10.75 million, YTD Return 21.36%, Expense Ratio 0.59% [8] Fund Flows and Investment Sentiment - Positive fund flows indicate favorable sentiment towards specific investment categories, with defense, AI, and infrastructure ETFs benefiting from significant inflows this year [9] - A study suggests that real-time flow data can enhance investment returns, emphasizing the importance of due diligence in ETF selection [10]

Core Insights - JPMorgan Chase & Co. has launched a $1.5 trillion initiative called the "Security and Resiliency Initiative" to support key industries for U.S. economic growth and national security [1][3] - The initiative increases JPMorgan's previous commitment from $1 trillion to $1.5 trillion over the next decade [3] - The focus will be on sectors such as energy, manufacturing, and defense, with specific attention to supply chain, advanced manufacturing, and strategic technologies [5] Financial Performance - JPMorgan is expected to report third-quarter 2025 earnings of $4.83 per share on revenues of $44.86 billion, reflecting year-over-year growth of 10.5% and 5.2% respectively [2] - The stock has seen a 46% increase since early April and a 28% rise year-to-date, with shares gaining about 2.4% on the announcement day [2] Strategic Focus Areas - The initiative aims to ensure access to essential medicines, critical minerals, and strengthen national defense while promoting AI-driven energy systems and technologies like semiconductors [4] - Key sectors targeted include supply chain and advanced manufacturing, defense and aerospace, energy independence, and frontier technologies [5] Analyst Recommendations - JPMorgan Chase & Co. has an average brokerage recommendation of 2.03, indicating a generally bullish outlook among analysts [11] - Of the 29 recommendations, 48.28% are classified as Strong Buy, suggesting continued confidence in the company's performance [12] Price Targets - The average price target for JPMorgan shares is $318.40, with estimates ranging from $240.00 to $370.00 [13]

Company Performance - Palantir reported a historic milestone of achieving $1 billion in revenues for the first time in its second-quarter 2025 results, driven by the artificial intelligence boom [1][2] - The company beat earnings per share estimates with 16 cents, improving 78% year over year, and revenues climbed 48% year over year to $1 billion, surpassing the consensus estimate of $938.33 million [2] - U.S. government revenues increased by 53% year over year to $426 million, while U.S. commercial revenues surged 93% to $306 million [2] Revenue Guidance - Following the strong quarter, Palantir raised its full-year revenue guidance to $4.14-$4.15 billion from the previous estimate of $3.90 billion, expecting approximately $1.085 billion for the ongoing third quarter [3] - The Zacks Consensus Estimate for the ongoing quarter is $989.44 million and $3.92 billion for the full year [3] Stock Performance - Palantir shares have more than doubled in value this year and increased by over 500% in the past 12 months, leading to a high valuation with shares trading at 276 times forward earnings [4] Investment Opportunities - Investors interested in Palantir's growth can consider ETFs with significant allocations to the company, such as Direxion Daily PLTR Bull 2X Shares (PLTU) and GraniteShares 2x Long PLTR Daily ETF (PTIR), which offer 200% performance of Palantir's common shares [5] - Tech ETFs like iShares U.S. Tech Independence Focused ETF (IETC) and iShares Expanded Tech-Software Sector ETF (IGV) have Palantir as a major holding, with shares of 10.3% and 9.6% respectively [6] ETF Details - IETC is an actively managed ETF focusing on U.S. tech companies, with Software & Services taking the largest share at 41.5% [7] - IGV targets software companies in technology and communication services, with application software comprising 60.69% of its holdings [8] - Palantir is the top holding in the Global X Defense Tech ETF (SHLD), which invests in companies benefiting from defense technology adoption [9]