New Eurex ETF options to provide access to Europe's defense sector

Why is “European Defense” a timely and relevant theme for derivatives trading?NicoNicolae Raulet, Eurex: European defense represents a distinct and forward-looking investment theme that resonates with investors seeking exposure to sectors driving innovation and security infrastructure. The European defense sector offers a clear, long-term growth narrative supported by structural developments in technology, manufacturing and supply chains within Europe. ETF options on this theme allow market participants to implement precise strategies – whether for hedging, tactical allocation, or portfolio diversification – while benefiting from the transparency and efficiency of listed derivatives. By listing options on the WisdomTree Europe Defence UCITS ETF, Eurex allows investors to access this theme via a cost-effective and flexible instrument.What’s the methodology behind the WisdomTree Europe Defence UCITS Index?Pierre Debru, WisdomTree: The index targets European-domiciled defense companies, tilting its weights toward those with greater exposure to defense activities. To be eligible, companies must derive at least 10% of their revenue from defense activities and then pass size and liquidity screens; the index targets a minimum of 20 constituents.Each selected company receives an Exposure Score based on defense-revenue share: Exposure score 3 (>50%), Exposure score 2 (25-50%), Exposure score 1 (10-25%). Weights are set by free-float market capitalization multiplied by the Exposure score, then capped (Exposure score 3 companies at 12.5%, others at 7.5%) with a liquidity adjustment where needed.What criteria does WisdomTree use to select companies for inclusion?PierrePierre Debru, WisdomTree: Eligible companies must be domiciled in a European country that is a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons1. In addition, they must derive at least 10% of their revenues from the European defense industry, which includes manufacturers of civil defense equipment, parts or products, defense electronics and space defense equipment.  The index seeks to exclude companies that are involved in controversial weapons banned by international law, such as cluster munitions, antipersonnel landmines, biological and chemical weapons, depleted uranium weapons and white phosphorus weapons, as well as companies that do not meet the Global Standards Screening.How does the strategy balance exposure across defense sectors or geographies within Europe?Pierre Debru, WisdomTree: Geographically, the strategy is 100% allocated to European-domiciled companies by design. There are no hard country or sector quotas; instead, weights reflect company size and the Exposure Score, which naturally concentrates the portfolio in Aerospace & Defense within GICS2 Industrials, with residual weight in adjacent suppliers (e.g., electronics/space). This keeps the exposure tied to European procurement and industrial capacity rather than imposing top-down allocations.How can investors access listed derivatives on the strategy? Nicolae Raulet, Eurex: From 3 November 2025, European investors have been able to access a range of listed options on the strategy via Eurex. These listed derivatives will provide investors with optionality to use derivatives in their investment strategy, improving outcomes and giving them greater flexibility to manage risk, generate income, or express market views. This approach ensures that thematic investing is supported by robust infrastructure and liquidity, making it easier for investors to manage risk and optimize exposure to emerging trends.  What makes this ETF unique versus other defense or aerospace funds?Pierre Debru, WisdomTree: The strategy offers a pure European exposure aligned with the region’s rearmament and strategic autonomy efforts, rather than a global defense mix dominated by non-European primes. It provides revenue-tilted purity. The free-float market cap × Exposure Score approach shifts weight toward companies with higher defense-revenue shares, not just the largest market caps, while single-name caps and liquidity adjustments maintain diversification and tradability. It also has policy-aligned exclusions, the controversial-weapons and Global Standards screen is consistent with European norms. It is listed across major European exchanges and has a competitive total expense ratio of 0.40% to support ease of access. In addition, secondary-market liquidity and tight spreads make the exposure practical to trade. How could investors use this ETF in a broader portfolio?Pierre Debru, WisdomTree: The strategy could serve as a satellite allocation alongside broad European equities to increase exposure to the rearmament theme without embedding non-European names. The revenue exposure tilt helps align portfolio weights with the drivers of Europe's capex3, procurement and replenishment cycles.  It also complements existing global or US defense holdings by reducing non-European dilution and tilting towards companies whose revenues are more closely tied to Europe’s procurement, stockpile replenishment and industrial capacity build-out. For investors mindful of event risk, a defense sleeve can serve as a hedge during periods of heightened geopolitical tension, while remaining an equity exposure. For institutional, multi-asset or multi-manager portfolios, a thematic satellite of around 1-3% of the total portfolio (or approximately 3-5% of the public-equity bucket) is common for a single structural theme. That being said, higher-conviction mandates may run up to 5% of the total portfolio. Positioning should reflect the mandate, risk budget, and portfolio correlations.What kind of demand or interest have you seen from institutional or retail investors for defense-related products?Nicolae Raulet, Eurex: Both institutional and retail investors are increasingly incorporating thematic ETFs into diversified portfolios, attracted by their clear investment narratives and ability to support long-term strategies. For defense-related products, interest has grown as investors seek differentiated themes that complement traditional asset allocations. This demand is reflected in active engagement from market participants looking for efficient ways to hedge and express views through listed derivatives.  Why are options on the theme a milestone for the industry? MichaelMichael Delew, WisdomTree: As the first thematic ETF in Europe to have listed options on Eurex, these newly listed options highlight the growing maturity of the ETF industry in Europe, which recently surpassed $3 trillion in assets under management.  Investors in Europe deserve more choice, and the listing of options on a thematic ETF represents the growth and maturity of this sector, highlighting the strong demand for innovative products and enhanced capital markets infrastructure. 1 commonly known as the Non-Proliferation Treaty or NPT2 GICS refers to Global Industry Classification Standard3 Capex refers to capital expenditureWeiter zum vollständigen Artikel bei Deutsche Boerse AG Unsponsored American Deposit Weiter zum vollständigen Artikel bei Deutsche Boerse AG Unsponsored American Deposit