Investing in security: discover the boom in the defense industry in 2025!

Investing in security: discover the boom in the defense industry in 2025!

In a world characterized by geopolitical tensions and unpredictable threats, security is increasingly becoming a central focus for business and society. The challenges of the global order require a rethinking of investments, especially in the areas of defense and cybersecurity. This is reported by the Sparkasse, which states that investments in security and defense technologies not only offer protection, but are also seen as an essential building block for economic growth.

Against the backdrop of the Russian attack on Ukraine in February 2022, which fundamentally changed the global political situation, many Western countries are showing increasing interest in increasing their defense budgets. Sales for the top 100 gun manufacturers rose to $632 billion in 2023, an increase of 6.7%. Analysts predict annual market growth of 5-8% in the coming years until 2030, which could make the defense industry one of the fastest-growing sectors on the stock exchanges.

Growing importance and investment opportunities

As geopolitical tensions intensify, particularly between Russia and the West and between the US and China, demand for defense technology is growing. Investments in companies in the arms and defense industry cover various main areas, including land-based systems such as tanks and armored vehicles, aerospace defense with fighter aircraft and drones, as well as naval systems and cyber defense, as reported by Sparkasse, among others.

The global cybersecurity market is estimated to be worth US$200-250 billion by 2025, with a further increase to US$620 billion by 2030. These developments show that security is not only a growing investment theme, but is also fueled by increasing investments in innovation potential and protection measures for critical infrastructure.

Defense stocks and ETFs on the rise

The shares of defense and cybersecurity companies are performing above average, which is also reflected in the current stock market declines. The S&P Developed BMI Select Aerospace & Defense index gained more than 41% in the first half of 2025, while the MSCI World only increased by 8.7%. Major defense ETFs offer investors low-cost diversification and show that the market for defense stocks continues to grow strongly.

There is currently a rise in specialized funds and ETFs in the security and defense sector. While there were only two defense ETFs at the start of 2024, that number could increase to eight by mid-2025. Funds like Deka-Security and Defense invest specifically in companies that offer surveillance, communications and cyber defense systems.

Risk factors in the defense sector

However, there are also challenges and risks. Active investments in security and defense funds offer attractive return opportunities, but are associated with high volatility and political dependencies. The risk of being affected by geopolitical tensions and ethical issues cannot be ignored. Experts therefore recommend a broad diversification of investments, a limited share of the portfolio and a clear investment horizon.

The shift in the global political situation with a doubling of the city's population by 2050 and the necessary security measures underline the relevance and demand for security and defense services. In this dynamic development, it is clear that security is not only a key challenge, but also an important investment theme for the future.

For more information, read detailed reports from Savings Bank and Onvista.