On the defensive: considerations for an Australian aerospace and defence fund

In early 2024, the Australian government projected a dramatic increase in the annual defence budget, expecting it to reach an estimated A$100 billion in the next decade, compared to the current budget of A$55 billion. At the time, this represented a significant commitment by the public sector to defence-related spending and strengthening the domestic aerospace and defence industry.

More recently, there has been renewed discussion and debate as to whether an even greater increase in the Australian defence budget is required. While there is yet to be a clear statement from the Australian government, it would not be surprising if the current or future government follow the lead of European leaders who have begun significant increases in military spending. For investors and fund managers, we think this signals an opportunity to invest in the businesses poised to benefit from a global surge in defence spending.