The iShares U.S. Aerospace & Defense ETF (ITA) is the largest and most liquid fund in its category. It tracks the Dow Jones U.S. Select Aerospace & Defense Index, providing concentrated, market-cap-weighted exposure to domestic contractors like RTX Corporation, Lockheed Martin, and Boeing. Anchored by long-term, non-discretionary government budgets, institutions and investors usually choose this fund as a tactical hedge against geopolitical instability and a direct play on rising global defense spending.
However, for long-term Indian investors, ITA carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like ITA) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. While there is no exact US-only UCITS equivalent available in Europe that perfectly replicates ITA, the alternatives listed below track broader global or thematic defense indices. These funds still offer massive exposure to US defense giants while adding strategic diversification through NATO allies and modern defense tech, providing similar thematic growth without the risk of the US Estate Tax.
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Why Indians are looking for UCITS alternatives to ITA
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like ITA while providing similar thematic exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): Unlike ITA, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for ITA
The iShares U.S. Aerospace and Defense ETF (ITA) provides targeted, pure-play exposure to the domestic aerospace and defense sector. It is heavily concentrated in industry leaders like RTX Corporation, Lockheed Martin, and Boeing, allowing investors to capture the revenue stability of long-term government contracts while serving as a highly liquid, strategic hedge against geopolitical instability.
Because there is no exact 1:1 "US-only" Aerospace & Defense UCITS ETF available in Europe, European investors looking for an alternative to ITA must look at global or thematic defense ETFs. Fortunately, these alternatives still offer massive exposure to US defense giants while adding strategic diversification through NATO allies and modern defense tech.
Here are the top three Accumulating UCITS alternatives to ITA:
1. VanEck Defense UCITS ETF
While there is no exact US-only UCITS clone for ITA, DFNS is the premier defense ETF in Europe. It tracks the MarketVector Global Defense Industry Index. It includes major US defense contractors that you would find in ITA (like Palantir, Leidos, and Booz Allen) alongside key European allies (like Safran and Thales). This gives you the defense sector exposure you are looking for, but mitigates the geographic concentration risk of holding solely US firms, all wrapped in a tax-efficient accumulating structure.
It is the largest, most liquid, and most popular pure-play defense UCITS ETF in Europe, offering the closest traditional alternative to ITA's exposure.
- Ticker: DFNS (London / Xetra)
- Total Expense Ratio (TER): 0.55%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Palantir Technologies, Leidos Holdings, Safran SA, Thales SA, Booz Allen Hamilton.
2. HANetf Future of Defence UCITS ETF
NAT0 provides exposure exclusively to companies generating revenues from NATO and allied defense spending. Unlike ITA, which restricts itself to US-based companies, NAT0 aligns perfectly with modern geopolitical realities by blending ITA's top U.S. defense giants (like RTX, Lockheed Martin, and General Dynamics) with European powerhouses (like BAE Systems and Rheinmetall). It reinvests all dividends automatically, shielding you from dividend tax drag and maximizing long-term compounding.
This fund offers a brilliant thematic focus on NATO and allied nations, capturing the exact geopolitical spending surge driving the aerospace and defense sector right now.
- Ticker: NATO (London / Xetra)
- Total Expense Ratio (TER): 0.49%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: General Dynamics, RTX Corporation, BAE Systems, Rheinmetall AG, Lockheed Martin.
3. Global X Defense Tech UCITS ETF
ARMR captures traditional defense and aerospace companies but tilts heavily toward the future of warfare: cybersecurity, artificial intelligence, and advanced defense networks. If you like ITA's sector exposure but want a modern approach that includes defense-centric tech companies alongside legacy military contractors, this accumulating ETF is the perfect pivot. It offers a slightly different, more tech-heavy growth profile compared to traditional aerospace ETFs.
This is a forward-looking alternative that blends ITA's traditional military hardware exposure with high-growth cybersecurity and AI defense technology.
- Ticker: ARMR (London / Xetra)
- Total Expense Ratio (TER): 0.50%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Palantir Technologies, Lockheed Martin, RTX Corporation, CrowdStrike, BAE Systems.
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like the ITA; you can also buy tax-efficient UCITS equivalents using Paasa.
The Compliance Advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: Guidance on FEMA regulations and LRS limits to ensure compliance.
Whether you are buying direct US stocks or investing in UCITS ETFs listed on European exchanges, Paasa provides global access with India-specific compliance and tax support.
