- U.S. institutional investors are increasing funding to the defense industry amidst geopolitical risks, with a net inflow to military ETFs reaching $4.8 billion in Q1 2023, compared to only $283 million a year prior.
- The shift indicates a perception of military spending as a long-term demand rather than a cyclical trend, driven by rising geopolitical tensions and direct conflicts.
- However, some investors caution against high valuations in defense stocks and question the broader economic contributions of military investments.