HANetf has announced its intention to change the underlying index for the Future of European Defence UCITS ETF (ticker: ARMY) to position the fund for Article 8 classification under the Sustainable Finance Disclosure Regulation (SFDR). This would make ARMY the only defence ETF in Europe with this status, the firm says.
The ETF will move from the VettaFi Future of Defence Ex US Index to the VettaFi European Future of Defence Screened Index. The change aims to align ARMY with investors’ desire to access the European defence theme in a responsible way, without diluting the fund’s core exposure. The new index restricts eligibility to companies headquartered in European NATO countries, focusing the portfolio on Europe’s defence industrial base.
The new index introduces strict exclusions covering controversial weapons and adds further responsibility criteria, while retaining the familiar revenue screening and single stock caps to provide pure-play, diversified exposure to the European defence theme.
The firm writes that these enhancements are also intended to make ARMY more accessible to investors in parts of Europe where ownership of products with exposure to controversial weapons has been constrained. ARMY aims to offer a clearer path for investors seeking defence exposure aligned with local policies and preferences.
Europe is undertaking a multi-year modernisation of its defence capabilities, replenishing stockpiles, scaling equipment procurement and rebuilding capacity.
ARMY seeks to reflect this structural investment theme while raising the bar on how exposure is delivered.
“We believe ARMY will be a very efficient vehicle to help investors support the strategically important European defence sector and allow the broadest range of investors to do so. Since we launched ARMY and NATO we have received feedback from a cohort of investors who needed more screens to be able to invest.”
HANetf writes that it brings a deep track record in defence thematics, having launched the Future of Defence UCITS ETF (ticker: NATO) in July 2023, now at USD3.13 billion AUM.
“That fund’s NATO/NATO-allied eligibility framework was designed to help investors align defence exposure with their values, recognising that NATO is, by statute, a defensive alliance. The planned ARMY transition builds on this experience,” the firm writes.
Hector McNeil, Co-Founder and Co-CEO of HANetf, says: “We’re very pleased to be taking this step to align our ARMY ETF with SFDR Article 8. This represents another important milestone in the evolution of defence investing in Europe. Investors increasingly recognise that security and sustainability are not opposing forces — they are interlinked. A well-equipped and responsibly governed defence sector is essential to maintaining peace, stability and the rule of law.
“By adopting a more focused, screened index, we aim to give investors confidence that their capital supports Europe’s legitimate defence capabilities while adhering to robust responsibility standards. Importantly, these enhancements also make the ETF more accessible to investors in regions where exposure to certain defence-related activities has previously been restricted, widening the opportunity to participate in Europe’s defence modernisation.”
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