EUAD: A Primer For The Select STOXX Europe Aerospace & Defense ETF (BATS:EUAD) | Seeking Alpha
Ceri Breeze/iStock Editorial via Getty ImagesThe Select STOXX Europe Aerospace & Defense ETF (EUAD) holds around two dozen of Europe’s largest aerospace and defense companies. This is an educational. . .
Ceri Breeze/iStock Editorial via Getty ImagesThe Select STOXX Europe Aerospace & Defense ETF (EUAD) holds around two dozen of Europe’s largest aerospace and defense companies. This is an educational article covering the fund’s structure and mandate, what it holds, how it might fit in an individual investor’s portfolio, its performance history, and peers. How is EUAD Structured, and What’s its Strategy?This is a passive fund that replicates theSTOXX Europe Total Market Aerospace & Defense Index. This particular STOXX screen looks for companies headquartered in Europe that make at least 50% of their revenue from civil or military aerospace and defense. Products in this space include commercial jet engines, passenger aircraft, and combat vehicles, artillery, and ammunition. The STOXX index is reconstituted and rebalanced daily by free-float market cap resulting in the largest companies having the largest weights. EUAD is a relatively new ETF. It launched in October 2024 and now has ~$1. 2B in AUM. The assets are owned by the Spinnaker ETF Series trust, which is marketed underthe Select Funds brand. Matthew Tuttle of Tuttle Capital Management serves as portfolio manager. Most of EUAD’s holdings are “American Depositary Receipts” rather than ordinary foreign shares. ADRs are certificates issued by U. S. banks representing shares of a foreign company. They trade on U. S. exchanges in USD and allow investors to own stakes in companies like Rolls-Royce via (RYCEY), for example, without needing a London brokerage account. The prospectus allows forswap agreementsif a stock can’t be sourced directly. These are contracts with banks that pay out based on a stock’s return without the fund actually holding the shares. EUAD has an expense ratio of 0. 50% and theportfolio turnoverwas 16. 2% for the fiscal year ended August 2025. What’s in the Select STOXX Europe Aerospace & Defense Portfolio?This is a highly concentrated fund on multiple levels. The three largest positions make up ~60% and the top ten close to 95%:Seeking Alpha (June 7, 2026)Just six countries are represented. Germany has Rheinmetall (RNMBY), MTU Aero Engines (MTUAY), and Hensoldt (HAGHY). Rolls-Royce and BAE Systems (BAESY) are headquartered in the UK, Airbus (EADSY) is a Dutch company, and Safran (SAFRY) and Thales (THLLY) are French. Italy has Leonardo (FINMY). Saab (SAABY) is Swedish. Seeking Alpha (June 7, 2026)Morningstar classifiesEUAD as large-cap growth with high scores for momentum and earnings but low marks for value and yield. These classifications reflect current industry trends and will change over time. It can be complicated for U. S. investors to own these companies individually. Several trade as unsponsored ADRs and/or on over-the-counter markets with thin volume. Some brokerages don’t offer OTC or foreign-ordinary trades at all. With EUAD you get them bundled together with a bid-ask spread of ~0. 15%. For many that’s a more convenient and liquid way to get this particular exposure. Where EUAD Might Fit in Your PortfolioEUAD works best as a satellite holding given its concentration. The large aerospace and defense firms in the S&P 500 are American–Lockheed Martin (LMT), RTX Corporation (RTX), Boeing (BA), GE Aerospace (GE). Their European counterparts aren’t in domestic index funds, so EUAD adds diversification. The ETF’s holdings are in euros, pounds, and kronor but the ADRs are in USD. EUAD doesn’thedge the differenceso its returns are also shaped by exchange rates. If the euro rises vs. the dollar, a euro-denominated holding will be worth more after it’s converted. That would add to the fund’s return while a stronger dollar would subtract. For a mostly domestic (U. S. ) portfolio, this is another source of diversification. High-growth and high-momentum factors can come with sharp price swings. Re: account choice, a cyclical fund like this should be held where the investor can leave it alone. With adividend of ~1%paid annually, tax treatment isn’t much of an issue. How Has EUAD Performed Since Inception?Almost all of EUAD’s cumulative return came in the first half of 2025, which coincided with a surge inEuropean defense spending. Russia’s war in Ukraine, tensions with the U. S. , and rising military budgets drew investors toward these stocks. Seeking Alpha (June 7, 2026)Since mid-2025 the stock has traded sideways though with sharp swings. The price has surged up and down on various geopolitical news, but on balance it’s been a wash. The ETF is up just ~4. 5% YTD and ~3. 5% over the trailing twelve months–well behind the iShares US Aerospace & Defense ETF (ITA) and the broader market:Seeking Alpha (June 7, 2026)The takeaway is that nearly all of EUAD’s gain came from one concentrated move shortly after it launched. How Might EUAD Respond to Different Markets?We can expect the commercial and defense companies will move differently. Rolls-Royce, Safran, and Airbus rise and fall with air travel and aircraft orders, which tend to track the broader economy–airlines fly and order less in a slowdown, more in an expansion. Defense companies depend on government budgets and multi-year procurement and are more connected (or vulnerable) to geopolitics. In EUAD’s short history, defense spending has been the biggest driver of returns. NATO’s higher spending targets and the EU’s push to buy more equipment from European suppliers boosted defense stocks and the fund with it. If budgets fall short of those targets or global tensions ease, EUAD could fall even if its commercial aviation side holds up. The reverse is also possible. Another point: Rolls-Royce, the ETF’s largest position,also sells power generationto data centers. It’s a small but fast-growing revenue source that’s contributed to the stock’s run-up since 2025. Concentration could also have a major effect on performance. One weak quarter from a top holding (engine recall, lost contract, etc. ) might be an outsized drag on the fund. And with everything in one industry, there’s not much to cushion the portfolio in a broad selloff. Does EUAD Have Any Close Peers?Only one other fund covers the same ground: the WisdomTree Europe Defense Fund. (WDEF) launched in July 2025 and is also passively managed, tracking a WisdomTree index. Many of the same names are at the top though it’s less concentrated at ~47 stocks. The top five are ~40% of assets vs. the ~78% for EUAD. It also holds more mid- and small-cap companies. The two ETFs have moved together, but WDEF’s exposure to smaller companies could separate them over time. Seeking Alpha (June 7, 2026)WDEF has an expense ratio of 0. 45% and is much smaller at ~$85M in AUM. Two other European defense funds trade on European exchanges, so most U. S. investors can’t buy them directly. One is the European version of WDEF (the WisdomTree Europe Defence UCITS ETF). The other, the iShares Europe Defence fund, is a closer match to EUAD in terms of concentration but favors the pure-play defense contractors. An investor who wants that without the commercial-aviation names might prefer the iShares fund assuming they can access it. U. S. and global defense funds like the SPDR S&P Aerospace & Defense ETF (XAR) and the Global X Defense Tech ETF (SHLD) hold mostly American companies and aren’t really peers. SummaryEUAD is a passive ETF that holds around two dozen of Europe’s largest aerospace and defense companies through ADRs. It’s highly concentrated, covering a single industry with five companies making up ~78% of assets. The fund doesn’t hedge its currency exposure, so the euro, pound, and kronor exchange rates affect returns along with individual stock performance. This is a high-growth, high-momentum holding that’s been rather volatile in its 20-month history. This article answers these four questions about EUAD:What is EUAD’s mandate and what does it hold?How might EUAD fit in an investor’s portfolio?How has EUAD performed, and what might impact future performance?How does EUAD compare with peers and other defense-centric funds?Author’s Note: This analysis reflects data and information available as of July 7, 2026. Editor's note:This article is intended to provide a general overview of the ETF for educational purposes only and, unlike other articles on Seeking Alpha, does not offer an investment opinion about the ETF. Editor's Note: This article discusses one or more securities that do not trade on a major U. S. exchange. Please be aware of the risks associated with these stocks.