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A brief decline in August was followed by a strong rebound in September, bringing the fund up 59.67% year-to-date. The robust performance once again demonstrates how the fund’s focus on defense delivers solid returns in times of heightened geopolitical tension. The fund continues to outperform both broad market indices and sector peers.
During September, Russia intensified its attacks on Ukraine. Toward the end of the month, one of the largest combined waves of drones and missiles so far targeted Kyiv and several other cities. Ukraine responded by calling for a joint European air defense shield. At the same time, President Trump signaled a clear shift in position. Having previously suggested territorial concessions, he now spoke of Ukraine, supported by Europe, being able to reclaim occupied territories. The change is seen as an important signal for the future direction of U.S. policy in the war.
Tensions have also spread to NATO’s eastern flank. Early in the month, up to 23 Russian drones entered Polish airspace, prompting Poland to invoke Article 4 and leading NATO to launch Operation Eastern Sentry. Meanwhile, multiple drone incursions in Denmark have sparked calls for a European “drone wall.” Overall, the pressure on NATO to respond more forcefully to Russian incursions and hybrid attacks is growing.
Once again, capability and readiness have become key watchwords, rather than fixed spending targets of 5%. This shift is likely to influence investment pace, spending levels, and priorities, which may vary significantly between countries and regions.
The Palestine conflict
In the Middle East, Israel carried out an unusual strike in Doha, Qatar, on September 9, targeting Hamas leadership. The attack was condemned by Qatar as a violation of its sovereignty. At the end of the month, the U.S. and Israel presented a joint peace plan for Gaza: an immediate ceasefire, hostage exchange, gradual Israeli withdrawal, Hamas disarmament, and an internationally led transitional administration. Israel has expressed support for the plan, while Hamas remains cautious. President Trump set a deadline of three to four days for a response.
| September 2025 – Highest performance | September 2025 – Lowest performance | ||
| PLANET LABS | 83% | NEXTNAV INC. | -20% |
| AVIO | 50% | ACSL LTD | -14% |
| IONQ INC | 44% | SCANDINAVIAN ASTOR | -14% |
| KRATOS DEFENSE | 39% | SATELLOGIC INC | -12% |
| MILDEF GROUP | 32% | EXAIL TECHNOLOGIES | -11% |
Company-specific news
In September, Aviation signed a €40 million contract with the European Space Agency to develop a reusable upper stage for future European launch vehicles. This represents an important technological investment that strengthens Europe’s independence in the space sector and lays the groundwork for competition with U.S. companies like SpaceX and other private players. Avio also expanded its collaboration with Raytheon on propulsion systems for the Standard Missile (Mk 104) program, worth up to USD 26 million in engineering work. The combination of space and missile propulsion highlights the company’s dual strategic role, supporting both civilian space programs and military capability.
Leonardo dentified cyber defense as one of its new growth areas in September, with a particular focus on the Nordic region as a priority for future acquisitions or partnerships. This comes as Nordic countries increasingly invest in cybersecurity and information defense in response to rising Russian hybrid attacks. Leonardo sees an opportunity to become a more integrated part of Europe’s digital defense architecture, complementing its traditional strengths in aviation and sensors. This marks a clear shift from hardware toward software and services.
In Sweden, the Swedish Civil Aviation Authority selected Frequentis as the supplier of a national UTM (Unmanned Traffic Management) system for drone traffic management. The system is central to enabling U-space integration in Sweden and represents a long-term business opportunity with recurring service revenues. The announcement carries extra significance in light of recent drone incursions over Poland and Denmark, where Russian drones crossed borders and caused concern within NATO. It underscores the need for robust solutions to monitor, control, and integrate drone traffic across Northern Europe’s airspace. Frequentis thereby strengthens its position as a key provider of C2 (command and control) solutions for drone management, making it an important component of our portfolio.