Tema International Defense ETF (ARMY)

ARMY owns shares in defense contractors. These are companies that sell weapons, aircraft, radar systems, missiles, and military electronics to governments and armed forces. The fund holds about 40 to 50 of them, mostly from the United States, the UK, and Western Europe. The logic is simple: when geopolitical tensions rise, governments spend more on defense, and these companies make more money.

What gets bought and sold

The companies in this fund have one main customer: governments. They build missiles, jets, radar systems, ship engines, cybersecurity tools, and everything else militaries need. They also provide maintenance, upgrades, and technical support. Unlike a company that sells toys or cars, where success depends on convincing consumers to buy, a defense contractor succeeds by winning government contracts.

When the business grows

Defense budgets go up when countries feel threatened. After 2001, America ramped up spending for wars in Iraq and Afghanistan. In recent years, Russia invaded Ukraine and China grew more assertive. Western governments responded by increasing defense budgets. Those increases ripple through to the contractors. More contracts. More revenue. More profit.

The flip side is obvious. If tensions ease and politicians decide to spend less on military hardware, budgets shrink. This happens, but it happens slowly. Defense contractors have powerful friends in government. Budgets rise fast in crises but fall slowly in peace.

The biggest risks

A major shift toward peace would hurt ARMY. If Russia and the West negotiated a lasting settlement. If Taiwan and China resolved their differences without militarization. Defense budgets would shrink and ARMY would fall.

An actual war between major powers would probably crash all stocks. Panic sells everything, even though defense budgets might rise later. In a true crisis, equities crash first.

Export controls can tighten. Programs get cancelled when new administrations take office. Scandals at large contractors ripple through the whole fund—there are only 40 to 50 holdings, so one major stumble moves the fund. A handful of huge contractors dominate the industry, so concentration risk is real.

Who should own this

ARMY works for investors with a specific geopolitical outlook. If you believe tensions will stay high and governments will keep spending on defense, this fund lets you own that bet without picking individual contractors.

ARMY is not a core holding for a balanced, long-term portfolio. It is too focused, too political, too dependent on one sector. It works as a side position if you have strong views on geopolitics and will exit if your outlook changes.

Before buying, check the fact sheet. See which countries’ contractors dominate. Too much weight on one nation? The real question: will governments keep spending this much on military hardware? If yes, ARMY makes sense. If you are unsure, pass.