It hasn't been a great year so far for ASX shares, as many investors would be acutely aware. Since the beginning of January, the S&P/ASX 200 Index (ASX: XJO) has fallen by a painful 5.35%. That means any ASX exchange-traded funds (ETFs) that track the ASX 200 would have also dropped by a similar amount.
But today, let's talk about one ASX ETF that has gone the other way, and bagged its investors a whopping return of 28.66% in 2025 so far.
This lucky fund is none other than the VanEck Global Defence ETF (ASX: DFND).
Yep, this thematic ASX ETF began the year at just $23.59 a unit. Today, those same units are worth $30.35 each at the time of writing. That's up a healhty 1.23% today thus far, as well as up that extraoridnary 28.66% in 2025. Investors have enjoyed a stupendous return of 51.75% over the past 12 months too.
So, how has this ASX ETF smashed the ASX 200 by more than 30% this year?
Image source: Getty Images
Meet the ASX ETF up 29% in 2025
Well, to answer that question, we have to examine this fund's internals. After all, the prices that an ETF commands are derived from the valuations of the underlying stocks that make up its portfolio.
As the name suggests, the VanEck Global Defence ETF is a fund that holds a basket of international shares of leaders in the defence and aerospace industries.
DFND's portfolio currently includes 28 individual shares, which hail from nine different markets, including France, Italy, South Korea, Israel, and Singapore. However, 53.3% of its weighted holdings are domiciled in the United States.
Some of this ASX ETF's top holdings include Palantir Technologies, Thales, RTX Corp, and Korea Aerospace Industries.
We need only look at the performance of these underlying investments to see why DFND's own performance has been so impressive recently.
Take Palantir. Its shares are up a massive 30.87% in 2025 to date and up almost 350% over just the past 12 months. Thales stock has risen by an even more impressive 88.74% since the start of January. Korea Aerospace Industries isn't quite as luminous but has still recorded a 44.6% rise this year to date.
So, given the explosive growth of DFND's top holdings in 2025, it's no wonder this ASX ETF is following suit.
As we've recently discussed, demand for defence stocks is soaring in 2025. This can probably be put down to rising geopolitical tensions on the world stage, as well as ongoing instability in the global economy.
Let's see if these trends hold for the rest of the year.
The VanEck Global Defence ETF charges a management fee of 0.65% per annum.
