Pentagon's $1.5T budget boosts drone tech ETF SHLD, but it lags broader defense ETFs in returns.

The Pentagon's FY2027 budget request includes $54 billion for autonomous and remotely operated systems, fueling interest in the Global X Defense Tech ETF (SHLD), which focuses on drones and autonomous defense technologies. Despite this thematic focus, SHLD has underperformed compared to broader U.S. aerospace and defense ETFs like ITA and XAR, partly due to its international holdings and high valuations in pure-play autonomous companies. SHLD holds major defense contractors like Lockheed Martin and RTX but also includes significant European and Asia-Pacific firms, adding geographic diversification but diluting U.S.-centric gains. Investors seeking exposure to autonomous defense tech may prefer direct holdings in companies like Kratos and AeroVironment or broader U.S.-focused ETFs for better performance.