February 6, 2026

Defence investment in a changing world: balancing security, responsibility and portfolio construction

by Ewen Emmerson

in General News Insights Research

In recent years, the global investment landscape has evolved in ways that few would have anticipated a decade ago. Governments across the US, Europe and Asia are committing to sustained increases in defence and security spending, reflecting a world that is becoming more fragmented, technologically complex and strategically competitive.

For investors, this raises both portfolio considerations and ethical questions. Defence investment has historically sat at the intersection of financial opportunity and social responsibility, and it is important that decisions in this area are approached with care, transparency and context.

A structural shift, not a cyclical theme

Defence spending is no longer best understood as a short-term response to geopolitical events. Across developed economies, multi-year funding commitments are being directed toward cyber security, intelligence systems, logistics networks, surveillance capability and advanced technology platforms, alongside traditional defence infrastructure.

This reflects a broader recognition that national security, cyber resilience and strategic infrastructure are foundational to economic stability, and that long-term investment in these areas is now a structural priority.

For investors, structural spending cycles tend to create more durable investment opportunities than purely cyclical ones, particularly where funding visibility is supported by government budgets and long-term procurement frameworks.

Considering ESG alongside changing realities

Environmental, social and governance considerations remain central to our investment process. However, ESG analysis is not static. It must evolve alongside the environment in which economies and societies operate.

Modern defence investment increasingly encompasses technologies designed to deter conflict, protect digital infrastructure and safeguard economic systems, rather than solely traditional armaments. Many investors, institutions and policymakers are now re-examining how defence exposure should be considered within responsible investment frameworks, particularly where collective security underpins social and economic stability.

That said, investor preferences vary widely. For some, defence exposure remains incompatible with their ethical objectives, and those preferences must always be respected.

Portfolio implementation: measured and diversified

Where appropriate for individual clients, defence exposure is implemented in a measured and diversified way, typically through broad global strategies rather than concentrated individual holdings. This ensures exposure remains proportionate within a diversified portfolio and aligned with each client’s objectives, values and risk profile.

Importantly, such allocations are introduced through portfolio rebalancing rather than increased overall risk, maintaining the intended balance across asset classes.

Transparency and client choice

Investment decisions in areas such as defence require open communication. Clients with specific restrictions or preferences should always feel confident that portfolios reflect their stated objectives and values, and we encourage ongoing dialogue where questions arise.

As the global landscape evolves, the role of defence investment in portfolios will continue to be debated. Our role is to assess these developments thoughtfully, balance opportunity with responsibility, and ensure portfolio decisions remain aligned with both long-term financial objectives and client preferences. If you would like to discuss how the themes outlined above may relate to your own investments or financial planning, please contact us to arrange a conversation with one of our advisers. Thoughtful planning and disciplined portfolio construction remain central to how we help clients navigate changing markets.

This article is for information only and does not constitute personal advice or a recommendation to buy or sell any security, fund or index. The value of investments can go down as well as up, and you may get back less than you invest. Past performance is not a guide to future returns. If you are unsure as to the suitability of any investment, please seek advice that takes your personal circumstances into account.