European ETF provider HANetf plans to change the underlying index of its Future of European Defence Ucits ETF (ticker: Army) to achieve Article 8 classification under the EU Sustainable Finance Disclosure Regulation (SFDR).
If successful, the ETF would become Europe’s only defence-focused ETF with Article 8 status.
The EU’s SFDR, a key pillar of the EU’s Green Deal and Sustainable Finance Action Plan, classifies investment funds into three categories: Article 6 (non-ESG), Article 8 (“light green” – promoting ESG characteristics) and Article 9 (“dark green” – targeting measurable sustainability objectives). The regulation aims to redirect capital towards sustainable investments, manage ESG risks and enhance transparency across financial markets.
The fund will transition from the VettaFi Future of Defence Ex US Index to the new VettaFi European Future of Defence Screened Index, which limits holdings to companies headquartered in European Nato member states. The change aims to provide exposure to Europe’s defence industrial base while ensuring a responsible investment framework.
The revised index introduces exclusions on controversial weapons and strengthens responsibility criteria, while maintaining revenue-based screening and single-stock caps to preserve diversified, pure-play exposure to the European defence theme.
“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,” stated HANetf.
German ESG market shifts toward defence sector
Hector McNeil, co-founder and co-CEO of HANetf, commented: “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.
HANetf continues to lead innovation in this space, offering products that not only capture powerful long-term investment themes but also reflect the values and regulatory expectations of European investors. We want to offer European investors an excellent and curated vehicle to strategically support the European defence sector. We also think it’s important that as a pure European provider we offer an ETF which can’t be influenced by geopolitics outside of Europe.”
