Defense Technology

The Defense Technology basket targets companies advancing next-generation capabilities in additive manufacturing, space systems, and integrated defense platforms to address surging global military spending, which reached $2.7 trillion in 2025 and continues accelerating into 2026 amid geopolitical tensions and modernization priorities. Comprising 20 names across aerospace and defense, industrials, and technology sectors with an effective N of 16.5, the basket captures diversified exposure to critical enablers of battlefield superiority, including rapid part production for supply chain resilience and proliferated space architectures for national security. The investment logic centers on structural demand drivers: U.S. defense budgets approaching $1 trillion with significant RDT&E allocations, the shift toward domestic sourcing and surge capacity, and technological sovereignty that favors firms delivering qualified, high-performance solutions over traditional legacy systems.

Key risks include execution challenges in scaling production under government contracts, potential delays in program qualifications or funding appropriations, and broader sector concentration that could amplify volatility from policy shifts or procurement cycles. The highest-conviction position is YSS at 9.4% weight with an exposure score of 78, as York Space Systems serves as a vertically integrated space and defense prime directly supporting the Department of Defense’s Proliferated Warfighter Space Architecture with proprietary hardware and software for mission-critical constellations, positioning it at the core of resilient, proliferated space capabilities essential for modern multidomain operations.