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Over the past three years, defense has returned to the forefront of political and public discussion in Europe. Geopolitical events continue to drive an increase in defense spending. Emerging challenges and the need for modernization contribute to a strong demand for defense products and services. Defense spending is expected to remain significant, with European countries investing in national security and military capabilities to meet the challenges. Also, the European Commission has taken steps to promote Europe’s defense industrial capacity and resilience through initiatives such as the European Defense Fund.
This renewed focus on defense by policymakers drives significant increases in planned spending. As a result, defense stocks have outperformed broader industrial benchmarks in recent years, and sector ETFs, along with thematic funds, have experienced steady inflows. However, many investors targeting the sector find themselves constrained by legacy indexes that offer broader coverage, often including civil aerospace, dual-use manufacturers, and conglomerates with limited exposure to defense.
The new STOXX® Europe TM Defense Futures are designed to fill this gap.
Eurex will launch the STOXX® Europe TM Defense Futures on 12 May 2025, offering targeted access to companies that derive a material share of their revenues from defense-related activities.
Focused exposures
The new futures contract is based on the STOXX® Europe Total Market Defense Capped Index, developed to offer focused exposure to European defense stocks. The index comprises European companies that have demonstrated a proven revenue exposure to defense activities based on verified industry classifications and public disclosures.
The index comprises 21 aerospace and defense firms, including Rheinmetall, Leonardo, Thales, BAE Systems, and Rolls-Royce Holdings. The index applies a 10 percent cap on individual constituents at each quarterly review to prevent overconcentration in a handful of large-cap names. This makes the index more balanced while still retaining high fidelity in the defense sector. The methodology focuses on revenue-derived classification using Revere (RBICS) data rather than just sector labels, ensuring a genuine representation of defense activity.
The STOXX® Europe TM Defense Capped Index, which underlies the futures, differs from the more general STOXX® Europe Total Market Aerospace & Defense Index. While the broader index includes aerospace and dual-use manufacturers, including those whose primary revenues may come from civilian aircraft, space systems, or industrial technologies, the capped index narrows its focus to firms with a more concentrated defense business model. This distinction is important to asset managers and sector allocators aiming to isolate thematic exposure without excess tracking error or overlap with non-defense industrials.
STOXX® reports that the index has delivered a return of 239 percent over the past three years and 52 percent in 2025. In comparison, the STOXX® Europe Total Market Aerospace & Defense index, which includes the sectors of design, development, production, and commercial aircraft maintenance, has returned 165 percent and 35 percent, respectively.
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