The June 2025 NATO summit in The Hague didn't just mark a gathering of diplomats; it marked a turning point in Europe's defense identity. For decades, European capitals enjoyed a peace premium: underspending on defense while relying on the strategic umbrella of the United States. But that model has cracked. With Russia's invasion of Ukraine in 2022, the Trump administration's renewed warnings on NATO burden-sharing and the broader fragility of the global order, European leaders are now confronting a 30-year backlog in defense investment. The summit's centerpiece, a serious push toward 5% of GDP in defense spending by 2035, isn't just a budgetary adjustment; it's a tectonic policy shift.¹

Defense spending in Europe surged 17% in 2024,² but this is only the early innings. While traditional hardware grabs headlines, the real capital flows are forming around digitally native systems: electronic warfare, soldier modernization, tactical IT, autonomous platforms and secure battlefield networks. These aren't just military capabilities; they're infrastructure upgrades for a new geopolitical era. Critically, much of the value creation is occurring outside of the mega-primes. Small- and mid-cap³ defense tech firms in Europe, many still under the radar of global allocators, are seeing a tailwind they haven't experienced in a generation. For U.S. investors, this is not a question of whether defense is investable; it's a question of whether your exposure reflects the shape of modern rearmament.

Building the Digital Backbone of Modern Armies

Chemring Group may not be a household name in U.S. defense portfolios, but it probably should be. Based in the UK, Chemring operates in some of the most strategically sensitive and undersupplied corners of modern warfare. On the munitions side, the company holds a near-duopoly in advanced plastic explosives in Europe, sharing the stage only with France's state-owned Eurenco.⁴ In an era where nations are laser-focused on securing domestic supply chains for critical ordnance, Chemring's position is more than just competitive; it's structurally embedded.

But what sets Chemring apart in this new defense investment cycle is its dual-track positioning. Alongside its heritage in energetic materials and countermeasures, Chemring has built a growing portfolio of capabilities in electronic warfare, signals intelligence and cyber defense, the high-tech plumbing of the 21^st-century battlefield. The Ukraine war has crystallized the market's understanding that kinetics alone are no longer sufficient; electronic dominance is the new margin of safety. Reflecting this, Chemring has booked recent wins across Sweden, Lithuania, Latvia, the UAE and Japan, signaling not just regional relevance, but growing global demand for its electronic warfare systems.⁵

In short, Chemring is one of the few mid-cap European players riding both sides of the rearmament curve: traditional resupply and next-gen battlefield architecture. For U.S. investors looking beyond the primes, and beyond U.S. borders, it represents the kind of overlooked, thematically aligned name that could re-rate⁶ meaningfully as Europe's defense strategy modernizes from the inside out.

Figure 1: Chemring's Strategic Footprint: Bridging Kinetics and Digital Warfare across NATO and Allied Markets

Soldier Systems, Rewired: INVISIO and the Frontline Tech Renaissance

INVISIO isn't just selling headsets, it's selling survivability, coordination and modern battlefield coherence. Based in Denmark, INVISIO has become a go-to provider of advanced communication and hearing protection systems for NATO-aligned militaries.⁷ These aren't accessories; they're enablers of operational integrity in the noisiest, most electronic-dense combat environments seen since World War II (WWII). Troops using INVISIO kits can communicate effectively amid artillery barrages, urban drone buzz and armored vehicle convoys, all while preserving hearing and cognitive clarity. That may sound niche, but it's exactly the kind of modernization imperative that European defense ministries are prioritizing post-Ukraine.

The company's core technology stack includes AI-driven noise filtering, digital signal processing and modular communications hubs that integrate with tactical radios, helmet-mounted sensors and soldier-worn devices. As the war in Ukraine revealed deep coordination frictions and sensory overload on the battlefield, demand for INVISIO's capabilities has surged, not only in Europe but increasingly from NATO partners and Indo-Pacific allies.⁸ For U.S. investors, INVISIO offers exposure to a precision niche within the broader defense-tech upgrade cycle: soldier modernization. It's a structural theme with funding visibility, operational urgency and global export potential, all anchored by a company that's already a category leader in its segment.

Figure 2: The Modern Soldier System: A Fully Integrated, Data-Enabled Combat Platform

MilDef: Wiring the Warfighter for the Digital Age

If the modern battlefield is increasingly defined by compute, connectivity and command infrastructure, then MilDef is one of Europe's mission-critical vendors. Based in Sweden, MilDef Group delivers ruggedized IT and networking gear purpose-built for frontline deployment, hardened laptops, servers, switches and communication systems designed to withstand kinetic shock, cyber threat environments and extreme conditions. In other words, MilDef isn't just a defense contractor; it's a digital infrastructure play embedded in the rearmament programs of multiple NATO allies.

MilDef has signed hardware deals with the Swedish Armed Forces for secure tactical comms gear.⁹ In 2024, MilDef expanded its footprint by acquiring a German military IT provider, positioning it to benefit directly from Germany's €100+ billion defense reset.¹⁰

While global defense investors often focus on the primes, MilDef represents the kind of specialized mid-cap that rides upstream capital flow, not from headlines, but from systems integrators, joint programs and NATO procurement pipelines. It's also a key beneficiary of a second-order trend: Europe's pivot toward indigenous, secure supply chains for sensitive technology. With a growing backlog and increasing integration into multilateral defense programs, MilDef is well-positioned as the IT spine of Europe's military transformation.

Figure 3: MilDef's Deepening Backlog Signals Multi-Year Demand for Digital Defense Infrastructure

Investing in Europe's Defense Renaissance: A High-Conviction, Under-Allocated Opportunity

Conclusion: Targeting the Digital Backbone of Europe's Rearmament

Europe's defense renaissance is no longer theoretical; it's on the books, in the budgets and flowing through to order backlogs. But what's often missed is that this is not simply about missiles or tanks; it's a digitally enabled rearmament. Tactical cloud networks, AI-enhanced soldier systems and electronic warfare are now commanding the spending growth. The names powering this shift aren't household staples like Airbus; they're Chemring, MilDef and INVISIO, firms that specialize in the compute, communications and ruggedization needed for modern deterrence. This isn't just reversion-to-mean defense spending; it's a super-cycle in strategic autonomy.

That's precisely why WisdomTree launched the WisdomTree Europe Defense Fund (WDEF). It is an ETF tracking the returns of the WisdomTree Europe Defense Index, a strategy purpose-built to capture Europe's defense modernization, concentrated in companies with both deep exposure and asymmetric growth potential. By screening for revenue-specific exposure to defense, WDEF sidesteps the legacy-industrial baggage and anchors investors directly to the innovation curve. If the macroeconomic story is that European security is now a structural investment priority, then WDEF is the vehicle that brings that thesis into a liquid, investable and scalable format.

Figure 4: Exposure in WDEF to the Companies Discussed in This Piece

¹ Source: NATO, "The Hague Summit Declaration: Allies commit to a transformational leap in defence spending" in "2025 The Hague NATO Summit" (pp. 1–2). NATO Headquarters, 6/25/25.

² Source: Stockholm International Peace Research Institute, "World military spending hits $2.72 trillion in record 2024 surge," Reuters, 4/27/25.

³ Small and mid-cap refers to market capitalization size segments. WisdomTree tends to see small cap as below $2 billion and mid-cap as between $2 billion and $10 billion.

⁴ Source: Edison Group, "Chemring Group: Record order book driving confidence," 5/25.

⁵ Source: Chemring Group PLC, "FY24 full-year results presentation transcript with Q&A" [transcript], 12/17/24.

⁶ Re-rate refers to a process where investors recognize a company aligning itself with an important narrative that causes those investors to reassess the company's valuation, typically in an upward fashion.

⁷ Source: Canadian Defense Review, "Tactical audio systems – INVISIO," 1/11/24.

⁸ Source: "INVISIO strengthens its ability to integrate the modern soldier system with the acquisition of UltraLYNX," Milipol News, 3/3/25.

⁹ Source: Juster Domingo, "INVISIO to supply European country with $45 M comms systems," The Defense Post, 3/15/24.

¹⁰ Source: MilDef Group AB, "MilDef successfully completes the acquisition of roda computer GmbH and resolves on an issue in kind" [press release], 3/6/25.