What Is the NATO ETF? Returns, Expense Ratio, Holdings, and Alternative ETFs Explained
The Themes Transatlantic Defense ETF is a thematic fund that concentrates on aerospace and defense companies from NATO member countries. It trades under the ticker NATO and is a leading defense-related ETF drawing attention amid geopolitical uncertainty and the outlook for related stocks.
SubscribeWhat Is the Themes Transatlantic Defense ETF?
This thematic ETF tracks the Solactive Transatlantic Aerospace and Defense Index and invests in aerospace and defense companies headquartered in NATO member countries.
It suits investors who want concentrated exposure to the defense and aerospace sectors during periods of geopolitical uncertainty.
It is a passively managed (index-tracking) ETF run by Themes.
How Does the Themes Transatlantic Defense ETF Invest?
| Item | Details |
|---|---|
| Tracked Index | Solactive Transatlantic Aerospace and Defense Index |
| Management Style | Passive (index tracking) |
| Rebalancing Frequency | Quarterly |
| Dividend Frequency | Annual dividend |
| Expense Ratio | 0.35% |
The fund holds aerospace and defense companies headquartered in NATO member countries that meet the index inclusion criteria. It is run as a non-diversified structure that holds major U.S. and European defense companies together. Rebalancing is reflected periodically in line with the index provider's methodology.
- A multinational composition spanning U.S. and European defense companies
- A non-diversified portfolio concentrated in a single sector theme
Themes Transatlantic Defense ETF Size and Costs (AUM and Management Fee)
Assets under management (AUM) stand at $90.7M, and the expense ratio is 0.35% per year.
Compared with broad industrials and defense ETFs such as XLI and ITA shown in the table, NATO is distinguished by a thematic structure that narrows its exposure to defense stocks from NATO member countries.
Themes Transatlantic Defense ETF Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeWhenever geopolitical issues come to the fore, the fund has tended to draw greater interest alongside the broader defense sector, and in the short term it tends to react sensitively to news on related issues.
Investor interest in the defense and aerospace theme has continued, and there have been periods of fund inflows. Given the nature of thematic money flows, inflows and outflows may fluctuate depending on how intense the underlying issues are.
Themes Transatlantic Defense ETF Pros and Cons
Concentrated exposure to defense companies from NATO member countries is its strength, but volatility and non-diversification risk, both typical of a sector theme, are cited as drawbacks.
💪 Key Strengths
⚠️ Points to Watch
Themes Transatlantic Defense ETF Alternative ETFs and Related Products
Broad ETFs that cover the industrials sector as a whole, such as XLI shown in the table, and sector ETFs centered on U.S. defense and aerospace companies, such as ITA, PPA, and XAR, offer a wider range of exposure than NATO. AIRR differs in that it follows a U.S. industrial renaissance theme and includes manufacturing beyond defense. By contrast, the key differentiator of NATO is that it extends exposure to all NATO member countries, adding European defense stocks as well.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 XLI | State Street Industrial Select Sector SPDR ETF | $168.31 | +0.9% | $30.3B | 0.08% | 1.12% | +8.7% |
 ITA | iShares U.S. Aerospace & Defense ETF | $205.79 | -0.2% | $11.9B | 0.37% | 0.28% | -3.5% |
 AIRR | First Trust RBA American Industrial Renaissance ETF | $99.24 | +0.8% | $8.5B | 0.69% | 0.1% | +1.1% |
 PPA | Invesco Aerospace & Defense ETF | $155.82 | +0.4% | $7.4B | 0.58% | 0.42% | -0.5% |
 XAR | State Street SPDR S&P Aerospace & Defense ETF | $222.64 | +0.2% | $5.0B | 0.35% | 0.19% | -8.7% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
| GE | GE Aerospace | 0.17% | $295.88 | -1.3% | $307.0B | 34.9 | 0.61% |
| RTX | RTX Corp | 0.16% | $191.60 | -0.9% | $258.2B | 31.1 | 1.5% |
| BA | Boeing Co | 0.14% | $192.28 | +0.9% | $152.0B | 87.6 | 0.02% |
| LMT | Lockheed Martin Corp | 0.11% | $551.51 | +0.5% | $127.3B | 20.3 | 2.54% |
| HON | Honeywell International Inc | 0.05% | $214.73 | +0.7% | $68.1B | 7.9 | 2.15% |
| HWM | Howmet Aerospace Inc | 0.05% | $208.15 | -1.6% | $83.0B | 44.9 | 0.24% |
Themes Transatlantic Defense ETF Investor Checkpoints
Here are the points to review before investing in NATO. As a sector theme product, it is worth checking defense sector concentration, regional composition, and sensitivity to news in advance, and it is advisable to understand how it differs in character from broad industrials ETFs before investing.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 💵 Expense Ratio | Check the cumulative cost impact over a long holding period | Fee applies |
| 🎯 Sector Concentration | Whether the fund is concentrated in the defense sector alone | High concentration maintained |
| 🌍 Regional Composition | Check the weighting of U.S. and European defense companies | Multinational composition maintained |
| 📈 Theme Sensitivity | Review volatility driven by geopolitical issues | Issue linkage needs to be monitored |
Defense sector concentration and the non-diversified structure are the main drivers of short-term volatility, and the possibility of thematic fund outflows should also be considered if related issues fade. Earnings and order fluctuations at individual large defense companies can also affect the performance of the entire index.
This is a thematic ETF suited to investors who want to concentrate on defense and aerospace companies from NATO member countries. Those who want broader diversification can also consider broad industrials and defense ETFs such as XLI and ITA.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
This article reflects information as of July 2, 2026.
Today's 5 AI picks, all free