ARMY ETF: Tema International Defense Fund Guide

Mandate and Portfolio Construction of the ARMY ETF

The ARMY ETF relies on active management rather than tracking a passive rules-based benchmark index. According to Tema ETFs, the fund seeks long-term growth by actively managing a narrow portfolio of companies capitalizing on structural, technological, and geopolitical shifts driving defense spending worldwide. This structure allows managers to adjust individual positions when contract awards, export restrictions, or national defense budgets change, without having to wait for scheduled quarterly reconstitutions.

The portfolio held 34 positions as of the September 18, 2026 snapshot. The top five holdings represented a substantial portion of invested assets: Rocket Lab Corporation at 7.16%, Elbit Systems Ltd. at 6.07%, Kongsberg Gruppen ASA at 5.14%, Hensoldt AG at 4.37%, and The Boeing Company at 4.27%. These weightings change as market prices shift and managers trade underlying positions, making it necessary to review the issuer factsheet for live allocations.

Portfolio valuation metrics reflect its growth orientation. As of September 18, 2026, the fund carried a price-to-earnings (PE) ratio of 29.91, traded at a price of $23.76 per share against a 52-week range of $21.15 to $28.96, and had approximately 290,000 shares outstanding. The fund pays no dividend. Because the mandate spans general aerospace, space launch, radar systems, and armored vehicle manufacturers, the fund functions as an international defense allocation rather than a targeted play on autonomous robotics.

The Ex-North-America Mandate Explained

The defining characteristic of the ARMY ETF is its decision to exclude North American-listed equities from its primary portfolio scope. Traditional defense funds available on United States exchanges allocate the majority of their capital to domestic prime contractors like Lockheed Martin, Northrop Grumman, and General Dynamics. The ARMY ETF explicitly directs capital outward to access international procurement programs that operate independently from United States budget debates.

This mandate serves investors who already hold United States defense equities and want to eliminate domestic overlap. Allocators holding core positions in domestic primes or broad funds can use an international fund to add companies like Kongsberg Gruppen in Norway, Hensoldt in Germany, or Elbit Systems in Israel without purchasing another layer of United States contracting risk. These foreign suppliers secure direct backlog from European NATO members, Asian allies, and Middle Eastern defense ministries.

The ex-North-America structure provides limited utility for investors who specifically want pure drone supply-chain exposure. While defense suppliers like Elbit Systems manufacture tactical reconnaissance drones, the broader portfolio remains committed to traditional defense hardware, naval warfare systems, and aerospace assemblies. Investors whose thesis focuses on autonomous flight software, commercial drone logistics, or small tactical UAV hardware will find more direct exposure through the drone ETFs guide or individual listings in the drone stocks directory.

Size, Liquidity, and Fund Closure Risks

The ARMY ETF operates with an asset base that exposes shareholders to liquidity considerations. As of September 18, 2026, the fund held approximately $6.83 million in assets under management (AUM). That is a small asset base for an exchange-traded fund, and investors must evaluate the practical trading frictions that accompany micro-cap fund structures.

Secondary market trading volume remains light. On the September 18, 2026 snapshot date, trading activity totaled 4,184 shares. Low daily trading volume causes bid-ask spreads to widen relative to multi-billion-dollar aerospace funds. Entering or exiting positions using market orders creates execution risk through price slippage. Investors trading small defense ETFs need to use limit orders and evaluate current market maker spreads before committing capital.

A prolonged low asset level also creates structural closure risk. Investment advisers incur fixed administrative, custodial, and regulatory expenses to operate exchange-traded products. At an expense ratio of 0.68%, an asset base of $6.83 million produces modest fee income for the manager. If asset gathering remains subdued over multiple annual operating cycles, the issuer may decide to liquidate the vehicle. Liquidation returns net asset value in cash to remaining shareholders, which can trigger unplanned taxable gains or losses.

ARMY ETF vs JEDI ETF

Comparing the ARMY ETF to the JEDI ETF, the other actively themed defense fund already covered on this site, shows where ARMY's international, ex-North-America mandate sits relative to a U.S.-anchored modern-warfare fund.

How to Research the ARMY ETF Before Allocating Capital

• Verify the current portfolio weights on the official Tema ETFs fund page before making investment decisions, because actively managed vehicles adjust allocations without prior index rebalance notices.
• Examine the fund's daily trading volume and market maker spreads on your brokerage platform, and place limit orders instead of market orders to avoid paying excessive slippage on low-volume trading days.
• Research key international holdings such as Elbit Systems and multinational firms like The Boeing Company on dedicated profile pages to understand how export permits and regional conflict affect underlying earnings.
• Compare the fund against broader allocation frameworks in the best defense ETF review to weigh whether an ex-North-America portfolio warrants paying an active 0.68% management fee.
• Assess foreign currency exposure, since the underlying revenue streams and market values of non-U.S. defense contractors fluctuate with movements in the euro, British pound, Norwegian krone, and Israeli shekel against the U.S. dollar.
• Check total assets under management quarterly to monitor whether the fund is attracting institutional inflows or remaining at risk of administrative closure.