Defense & Security

The Defense & Security Portfolio holds US-listed companies across defence and national security: makers of aircraft, defence systems and platforms, satellite and space infrastructure, command and communications technology, and the logistics and supply chain businesses behind them. These companies typically work on long-term government contracts, which gives their revenue a different rhythm from most listed businesses. Vested’s research team selects the companies and sets the weights. You can see the full list of holdings and their weights once you sign up.

This portfolio may suit you if you want exposure to defence spending as a multi-year theme and prefer businesses with long contract cycles over fast-moving consumer or technology names. It is aimed at long-term investors. It is not for everyone: some people choose to exclude defence from their portfolios on ethical grounds, and that is a fair reason to skip it. It is also concentrated in a small group of companies serving a small group of customers, mainly governments.

Yes. Resident Indians can invest in the Defense & Security Portfolio through Vested under the RBI’s Liberalised Remittance Scheme (LRS), which currently allows you to remit up to USD 250,000 per financial year for overseas investments. You open a US investment account through Vested, complete a one-time KYC, and transfer money from your Indian bank account. The shares and ETFs are held in your own account in your name, not pooled in a fund, and you can sell and bring the money back to India whenever you want. Gains are taxable in India depending on how long you hold, so factor that into your planning.

Vested reviews every Managed Portfolio, including Defense & Security, once a quarter. A review does not automatically lead to a rebalance. The portfolio is only changed if the research team concludes that the existing allocation no longer makes sense, for example when a company no longer fits the theme or when the weights have drifted away from what was intended. Managed Portfolios are non-discretionary, which means nothing is bought or sold in your account on its own. You are notified when a change is recommended and you decide whether to approve it. There are no brokerage or transaction charges on rebalancing trades.

Because picking defence stocks yourself means tracking contract awards, programme budgets and procurement cycles, which is not information most retail investors follow closely. A Managed Portfolio does that groundwork for you: Vested’s research team decides which companies go in, how much weight each one gets, and when something should change. You still own the actual shares and ETFs in your own US account, so you can see exactly what you hold, and this is not a fund unit. It also helps with a problem most people run into on their own, which is quietly ending up with far too much money in one stock. You pay an annual advisory fee on the amount you invest, with no purchase fee, no brokerage on rebalancing trades and no exit load. None of this stops you buying individual US stocks on Vested as well, if you want to do both.

Revenue here depends on government budgets and procurement decisions, which move with politics rather than the business cycle. Contracts can be delayed, resized or cancelled, and programme cost overruns hit margins. Export controls and international arms rules limit where these companies can sell. A change of government or a shift in spending priorities can change the outlook quickly. Customer concentration is high, and so is regulatory scrutiny. Vested tags this portfolio as high risk. Because the holdings are priced in US dollars, your returns in rupees also depend on how the rupee moves against the dollar over the period you stay invested.

There are five steps. First, sign up on Vested and complete your KYC, a one-time process to open your US investment account. Second, add money by remitting from your Indian bank account under the LRS route. Third, open the Defense & Security Portfolio and read through its holdings, risk tag and fee before you commit. Fourth, invest the amount you want. You can start small and add to it over time, and there is no lock-in. Fifth, review it periodically and approve or decline any rebalancing recommendation you are sent. You can withdraw at any time without an exit load.

The appeal is visibility rather than excitement. Defence contracts typically run for years, so revenue is easier to forecast than in most industries, and the customer is a government rather than a consumer whose spending falls in a downturn. Several countries have committed to sustained increases in defence spending rather than one-off rises, and NATO members have targets to meet. Stockpiles used up in recent years need replacing, and much of the spending is going into modernisation: satellites, cybersecurity, communications and intelligence systems, not only equipment. The other side of it: this depends on political decisions, which can change, and some investors deliberately exclude defence on ethical grounds.