At a glance
NATO charges 0.35% a year, below the 0.41% average of the 8 funds most like it (the 2nd cheapest of 8). It has $100.7M in assets, the 7th largest of that group; it paid 0.47% of its price in distributions over the past 12 months, annual. Over the past year it returned −7.3% with distributions reinvested (S&P 500: +11.5%), 7th of those 8 funds. Its ten largest positions make up 58.6% of the fund, out of 84 in all.
The short version
Themes Transatlantic Defense ETF (NATO) is an index fund that tracks the Solactive Transatlantic Aerospace and Defense Index, which holds aerospace and defense companies headquartered in NATO member countries. Unlike US-focused defense funds, it had about 30% of its assets in European companies such as Rolls-Royce, Airbus and Safran as of June 30, 2026. Its expense ratio is 0.35%, below the 0.41% average of similar funds.
Price history
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NATO -7.3% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| NATO official prospectus, to Dec 31, 2025 | — | +50.00% | — | — | — | +41.22% |
| NATO price data to Oct 27, 2026 | -5.4% | -7.3% | — | — | — | +19.2% |
- Over the year to Oct 27, 2026, NATO returned -7.3%, 7th of 8 among similar funds.
- Its worst full calendar year was 2025 (+50.9%); its best was 2025 (+50.9%).
- The deepest fall in its price history was 19.3% (Mar 2, 2026 to Oct 23, 2026), not yet recovered.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | -5.4% | — |
| 2025 | +50.9% | +50.00% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Before this security existed |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Before this security existed |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2025 | $0.1700 |
What's inside
As of Jun 30, 2026, the fund held 84 securities; the ten largest made up 58.61% of assets.
| Holding | Weight | |
|---|---|---|
| General Electric Co | 9.69% | |
| RTX Corp | 7.58% | |
| Boeing Co | 7.25% | |
| Rolls-Royce Holdings PLC | 7.13% | |
| Lockheed Martin Corp | 5.17% | |
| Airbus SE | 5.08% | |
| Safran SA | 4.87% | |
| Howmet Aerospace Inc | 4.83% | |
| General Dynamics Corp | 3.61% | |
| TransDigm Group Inc | 3.39% | |
| BAE Systems PLC | 3.36% | |
| Northrop Grumman Corp | 3.35% | |
| Honeywell International Inc | 3.14% | |
| Honeywell Aerospace Inc | 3.10% | |
| L3Harris Technologies Inc | 2.51% |
By country
United States 69.74%United Kingdom 11.28%France 6.27%Netherlands 5.08%Germany 3.88%By asset type
Stocks 99.62%By sector
Sectors of the companies held, for the 54.5% of the fund in companies that have a stock page here; other holdings and cash aren't classified. Source: N-PORT holdings report as of Jun 30, 2026. Cash, money-market funds and derivatives are shown separately from the securities list.What changed recently
- Over the three months to Jun 30, 2026, investors withdrew a net $6.3M (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +0.21%, +6.20%, -1.08%.
How it works
This ETF is an index fund: it tries to match the Solactive Transatlantic Aerospace and Defense Index, before fees, rather than beat it. To qualify, a company must earn at least 50% of its revenue from aerospace and defense, per FactSet's classification, and be headquartered in a country that has been a NATO member for at least three months. Shares must also trade at least $1 million a day on average. Every company that passes is included; as of December 31, 2025, the index held 78.
Each company is weighted by free-float market value (the value of shares available to public investors), within limits. No stock can exceed 8% or fall below 0.05%, and stocks above 4.5% can make up no more than 45% combined. The index rebalances quarterly, on the first Wednesday of February, May, August and November. Weights can drift in between: General Electric was 9.7% of the fund as of June 30, 2026.
The fund generally owns every index stock in similar proportions, but may hold a representative sample when that is cheaper or more practical. At least 80% of net assets must be in index stocks or depositary receipts (certificates that stand in for foreign shares). It uses no leverage and held no derivatives as of June 30, 2026.
What it really costs
- NATO charges 0.35% a year, versus an average of 0.41% for the similar funds below (2nd of 8, cheapest first).
- Using the prospectus's standard example, $10,000 invested would cost about $36 in the first year and $443 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| NATO | $36 | $113 | $197 | $443 |
In a retirement portfolio
It is a narrow, volatile sector fund with a short history, so it fits better as a small add-on than as a foundation.
NATO launched in October 2024, so it has no record from the 2008, 2020 or 2022 downturns. Its only full calendar year, 2025, returned 50%. It then fell 19.3% between March 2, 2026 and October 23, 2026, and had not recovered as of October 27, 2026. Its volatility was about 22% a year. Anyone who may need to sell shares in a bad year could end up selling after a drop like that. Many of its holdings depend heavily on government defense spending, so changes in budgets or policy can move the fund sharply.
Income is small. The trailing yield was 0.47% as of October 27, 2026, paid once a year. Costs are low for the category. In the SEC's standard example, $10,000 invested would cost $36 in fees in the first year and $443 over 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Investors wanting aerospace and defense stocks from both sides of the Atlantic, with about 30% in UK, French, Dutch, German and Italian companies.
- Cost-conscious buyers of a sector fund: its 0.35% expense ratio matches XAR and is below ITA's 0.40% and PPA's 0.57%.
- Investors holding a small satellite position who can accept large swings, such as the 19.3% drop between March and October 2026.
Look elsewhere if
- Investors wanting a long track record: the fund launched in October 2024 and has not yet been through a broad bear market.
- Income seekers: the trailing yield was 0.47% as of October 27, 2026, and the fund pays only once a year.
- Investors uneasy with concentration: the top 10 holdings made up 58.6% of assets, led by GE, RTX and Boeing, as of June 30, 2026.
Close alternatives
Matched by holdings overlap from the latest N-PORT reports.
| Fund | Overlap | Cost | Net assets | 1 yr | 3 yr |
|---|---|---|---|---|---|
| NATO this fund | — | 0.35% | $100.7M | -7.3% | — |
| ITA iShares U.S. Aerospace & Defense ETF | 59% | 0.4% | $14.44B | -0.3% | +24.8% |
| PPA Invesco Aerospace & Defense ETF | 58% | 0.57% | $8.26B | -1.3% | +26.1% |
| MISL First Trust Indxx Aerospace & Defense ETF | 54% | 0.6% | $801.9M | -5.2% | +23.9% |
| FOWF Pacer Solactive Whitney Future of Warfare E… | 41% | — | $15.8M | — | — |
| GCAD Gabelli Commercial Aerospace and Defense ETF | 40% | 0% | $43.7M | +6.2% | +29.7% |
| XAR SPDR S&P Aerospace & Defense ETF | 37% | 0.35% | $6.47B | -10.5% | +26.6% |
| SHLD Global X Defense Tech ETF | 35% | 0.5% | $7.24B | -6.9% | +36.9% |
Questions investors ask
What does the NATO ETF invest in?
NATO holds aerospace and defense companies headquartered in NATO member countries and tracks the Solactive Transatlantic Aerospace and Defense Index. As of June 30, 2026, it held 84 stocks. The largest were General Electric (9.7%), RTX (7.6%), Boeing (7.2%), Rolls-Royce (7.1%) and Lockheed Martin (5.2%). US companies made up about 70% of assets, the UK about 11% and France about 6%, with smaller weights in the Netherlands, Germany and Italy.
Is the NATO ETF good for retirement?
It works better as a small, higher-risk holding than as a core one. It owns a single industry, and many of its holdings rely on government defense spending. It launched in October 2024 and returned 50% in 2025. It then fell 19.3% between March and October 2026 and had not recovered as of October 27, 2026. Income is minimal: the yield was 0.47%, paid once a year.
NATO vs ITA: what's the difference?
Both hold aerospace and defense stocks, and about 59% of their holdings overlap. iShares U.S. Aerospace & Defense ETF (ITA) focuses on US companies. NATO also holds European firms such as Rolls-Royce, Airbus, Safran and BAE Systems. NATO charges 0.35% a year and ITA charges 0.40%. ITA is far larger, with about $14.4 billion in assets as of June 30, 2026, compared with about $101 million for NATO. Over one year, NATO returned -7.3% (as of October 27, 2026) and ITA returned -2.3% (as of October 30, 2026).
Does the NATO ETF pay a dividend?
Yes, but it is small and paid once a year. As of October 27, 2026, the fund had paid $0.17 per share over the past 12 months, for a trailing yield of 0.47%. Defense and aerospace companies tend to reinvest much of their profit or buy back shares, so this fund is built more for growth than for income. Investors who need regular cash flow would likely look to other funds.
How has the NATO ETF performed since launch?
Results have been strong at first and weaker since. According to the prospectus, the fund returned 50% in 2025 and averaged 41.22% a year from its October 2024 launch through December 31, 2025. Its strongest quarter was a 24.25% gain in the quarter ending June 30, 2025. In 2026 it lost ground: -5.4% for the year through October 27, 2026, and -7.3% over the prior 12 months.