HANetf Lists New Screened Defense ETF on LSE, Expanding NATO-Themed Product Suite

The Future of Defence Screened UCITS ETF began trading on December 10, 2025, under the ticker NATE. This launch expands the firm’s thematic defense range with a product designed to meet stricter sustainability criteria.

ETF Structure and Screening
The new fund is classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR), indicating it promotes environmental or social characteristics. Its key screening criteria restrict investments to companies headquartered in NATO member states. The fund explicitly excludes companies involved in controversial weapons. It carries a total expense ratio of 0.49%.

This is HANetf’s second Article 8 defense ETF, following the Future of European Defence UCITS ETF (ARMY), which launched earlier in 2025.

Context: The NATO Spending Commitment
The ETF’s strategy is directly linked to a recent, substantial shift in NATO policy. At the 2025 summit in The Hague, NATO members agreed to a new defense investment pledge. The commitment aims to raise annual combined spending to 5% of Gross Domestic Product (GDP) by 2035, more than double the previous 2% guideline.

The 5% target is structured in two tiers:

• 3.5% of GDP for core defense expenditures (personnel, equipment, operations).

• 1.5% of GDP for related security spending, including critical infrastructure protection, cyber defense, and strengthening the industrial base.

This decision follows a decade of increased spending, driven by geopolitical events. In 2014, only three NATO members met the 2% spending target. By 2024, all members are expected to meet or exceed it, with European allies and Canada investing a combined total of over $485 billion.

Market Position and Existing Products
HANetf has established a significant position in the European defense ETF market. Its flagship Future of Defence UCITS ETF (NATO), launched in July 2023, had accumulated over $2.8 billion in assets as of late 2025.

Analysis: A Calculated Product Expansion
The launch of NATE addresses specific investor and regulatory demands. By applying Article 8 screens and limiting holdings to NATO-based firms, HANetf aims to make defense exposure accessible to a broader pool of capital, particularly from investors or regions with restrictions on certain defense activities.

The overarching investment thesis for the defense sector remains anchored in the NATO 2035 spending pledge. However, analysts note the fiscal challenge is significant. A report from CaixaBank Research questions the feasibility of the 5% target for European Union members, given existing fiscal constraints and competition for funding other strategic priorities like the green transition. The report suggests a level of 3-3.5% of GDP may be a more realistic ambition for Europe over the next decade.

HANetf’s expansion reflects a broader trend of ETF issuers carving out niches within the defense theme. In 2025 alone, several other global and regional defense ETFs have launched, including funds focused specifically on Asia and Europe.