5 Reasons Why Themes Transatlantic Defense ETF Could Be Poised For Significant Upside Potential in 2025
The Themes Transatlantic Defense ETF provides investors with rules-based exposure to a basket of publicly traded aerospace and defense companies headquartered in NATO member countries. Built around a transparent index methodology, the fund aims to reflect a broad view of transatlantic defense infrastructure through an investable lens.
Themes Transatlantic Defense ETF (NASDAQ: NATO)
Fund Strategy and Design
The ETF seeks to track the performance of the Solactive Transatlantic Aerospace & Defense Index, a passive benchmark that includes companies primarily classified in the aerospace and defense industries.
To qualify for inclusion, firms must derive at least 50% of their revenue from aerospace or defense activities, be headquartered in a NATO country, and meet minimum trading volume and liquidity standards. The index is reviewed and rebalanced quarterly to maintain exposure alignment and limit overweighting.
Geographic and Sector Exposure
This ETF is designed to reflect the industrial strength of NATO-aligned nations. As of mid-2025, the United States accounts for the largest allocation—roughly 70%—followed by France, the United Kingdom, Germany, and other NATO participants including Canada, Italy, Sweden, and Turkey.
The portfolio is concentrated in the Industrials sector, which comprises over 98% of total exposure, with smaller contributions from adjacent categories such as aerospace-related technologies.
Themes Transatlantic Defense ETF (NASDAQ: NATO)
Holdings and Index Methodology
The ETF tracks the Solactive Transatlantic Aerospace & Defense Index, which uses a strict inclusion process to select companies with meaningful exposure to the defense and aerospace sectors. Eligible companies must be headquartered in NATO member countries and classified by FactSet as deriving 50% or more of their revenue from aerospace or defense operations.
The index is rebalanced quarterly to maintain alignment with these criteria and to adjust weights based on market movements and liquidity.
The methodology applies capping rules to prevent over-concentration. No single company can represent more than 8% of the total weight, and companies above 4.5% are collectively limited to 45% of the portfolio. This helps maintain diversification across geographic regions and company sizes. The index also filters for liquidity, ensuring that all constituents meet minimum trading volume thresholds.
As of the latest update, the ETF holds around 70 companies. Top allocations include global defense and aerospace leaders from the U.S. and Europe—such as GE Aerospace, Boeing, RTX Corporation, Honeywell, Airbus, and Lockheed Martin. These holdings reflect both legacy defense firms and advanced manufacturers serving military and commercial aerospace markets.
The composition evolves gradually with each quarterly rebalance, maintaining strategic relevance across the NATO defense landscape.
Performance Overview
Since its inception on October 11, 2024, the Themes Transatlantic Defense ETF has demonstrated strong performance, reflecting heightened global attention on aerospace innovation and defense modernization.
As of mid-2025, the fund has delivered a cumulative return of over 40% (NAV), with a year-to-date return exceeding 40% and a three-month return above 24%. These figures are drawn directly from index tracking and reflect underlying sector dynamics during a time of significant investment in transatlantic defense capabilities.
Its results have exceeded those of broader benchmarks over the same period. For context, the MSCI ACWI Index — which represents global equity markets — returned approximately 16% YTD in the same timeframe.
The fund’s focused exposure to the aerospace and defense industry, combined with its rules-based methodology, has contributed to its strong showing during a period of rising geopolitical awareness and expanded defense budgets across NATO member states.
Introducing the Management Team of Themes ETFs
(NASDAQ: NATO)
José Gonzalez - CEO
José is the CEO and co-founder of Themes ETFs. He was also the co-founder and former director of Global X, a New York based provider of exchange traded funds. José was instrumental to the success of Global X, making the company a reference as a provider of exchange traded funds that nowadays has surpassed $10 billion in managed assets across more than 60 different products.
Throughout his career, José has acquired unique expertise in the asset management and brokerage business, having served in roles at Prudential Securities, MAPFRE Inversion, and Banco Santander. José earned his Bachelor’s degree from Universidad Autónoma de Madrid.
Tracy Gilvarry Grant - General Counsel
Tracy Grant is the General Counsel and co-founder of ThemesETFs.
Tracy is a seasoned, goal-focused legal professional with demonstrated track record of advising and representing high-profile international corporations, international investment banking institutions, mutual funds and insurance companies.
Her experience is in providing incomparable advice on mutual funds, secured transactions, financing transactions, securities and regulatory compliance and corporate and commercial law.
Calvin Tsang - Head of US Product Management & Development
Calvin Tsang has been with Themes Management Company LLC since its inception in January 2023, serving as the Head of Product Management & Development and as a Portfolio Manager. He is responsible for building out the ETF platform and infrastructure in the US.
Calvin possesses a rich depth of knowledge in managing ETF strategies, spanning across commodities, options, equity, and fixed income. Prior to joining Themes Management Company LLC, Calvin was a Portfolio Manager at Cboe Vest from January 2021 to December 2022, Multi-Asset Portfolio Manager at QS Investors from May 2019 to December 2020, and Senior Portfolio Analyst at ProShares from August 2014 to May 2019.
Calvin is a CFA charterholder and a certified FRM. He earned dual Bachelor’s degrees in Accounting and Economics from Binghamton University.
Sources
- Source 1: https://themesetfs.com/etfs/nato
- Source 2: https://themesetfs.com/documents/Factsheets/Themes-ETFs-FactSheet-%28NATO%29-%2810.11.2024%29.pdf
- Source 3: https://www.schwab.wallst.com/schwab/Prospect/research/etfs/reports/reportRetrieve.asp?reportType=etfrc&symbol=NATO
- Source 4: https://www.dividend.com/etfs/nato-themes-transatlantic-defense-etf
- Source 5: https://cbonds.com/etf/231719
- Source 6: https://public.com/stocks/nato
- Source 7: https://www.itiger.com/stock/NATO/company
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