(AI video summary)
This video was created on 13 June 2025 for IG audiences by ausbiz.
ASX code: NGI, DFND
Navigator Global Investments
Navigator Global Investments emerges as a compelling defensive play that has been completely overlooked by the market over the past year. This asset management company invests in a diversified range of alternative asset management firms, offering investors exposure to approximately $120 billion US in assets under management.
The company demonstrates exceptional financial metrics with incredible stability, growth and return on equity. Currently trading on a price-to-earnings (P/E) ratio below four, Navigator Global offers an earnings yield of 25% – a compelling valuation for a company that has doubled its earnings over the past three years.
Alternative asset managers stand to benefit significantly from market volatility and investor fear, as they provide superannuation funds and large institutions with safe haven opportunities for their capital. During periods of global instability, these specialised investment managers become increasingly valuable as traditional markets face uncertainty.
Vaneck Global Defence
Vaneck Global Defence ETF provides comprehensive exposure to a portfolio of global companies involved in military and defence research, consulting, and electronic equipment manufacturing. The fund holds approximately $118 million in total assets and offers strategic allocation to European defence contractors alongside established US players.
Defence spending is experiencing a structural shift as countries increase military expenditure from 2.5% to 3.5% of gross domestic product (GDP). This represents trillions of dollars in additional spending globally, creating sustained demand for defence contractors over multiple years.
Defence sector fundamentals support long-term growth
Major defence contractors are projecting revenue growth of 20-30% over the next five years based on current contract commitments alone. While these companies trade at premium valuations, the robust fundamentals justify higher multiples given the predictable nature of government contracts and sustained spending requirements.
The defence sector benefits from what amounts to passive money flowing into the industry through government budget allocations. Unlike cyclical industries subject to economic downturns, defence spending typically maintains stability even during economic uncertainty, making these investments particularly attractive during volatile periods.
Smaller defence companies also present opportunities, where single contract awards can transform company prospects and establish platforms for sustained growth. The combination of established defence giants and emerging specialist companies provides diversified exposure to the expanding global defence market.
Investment considerations for defensive positioning
Both Navigator Global Investments and defence-focused investments offer different approaches to defensive positioning. Navigator Global provides exposure to alternative asset management during periods when traditional investments face headwinds, while defence investments capitalise on structural increases in military spending driven by geopolitical tensions.
These defensive plays address the reality that global instability appears likely to persist, creating ongoing demand for both alternative investment strategies and defence capabilities.