Rocket Lab and Kratos aren’t only sending drones and satellites into space—they’re putting defense ETFs into orbit. While these cutting-edge defense stocks rocket on the coattails of fresh Pentagon policy changes and Trump-era deregulation, investors are flocking to ETFs that combine military might with next-generation innovation. With drone demand through the roof and red tape getting burned, funds like Global X Defense Tech ETF (NYSE:SHLD) and SPDR S&P Aerospace & Defense ETF (NYSE:XAR) are becoming stealth champs in 2025’s search for returns.
Defense ETFs are no longer simply the unflappable corner of the marketplace that performs well in times of war. In 2025, they’ve become high-speed vehicles catching the tailwind of advanced technology, military modernization, and now—America’s drone boom. Drone stocks jumped on Thursday night after Defense Secretary Pete Hegseth released sweeping memos to accelerate domestic drone production and deployment. The memos, shared on X (formerly Twitter), will remove bureaucratic roadblocks and give the military the freedom to quickly embrace what Hegseth described as “vital” technologies.
