Investors have been increasing their exposure to defence and drone-related companies ahead of the UK government’s latest defence spending plans, according to new data from investing and trading platform IG.
The government’s Defence Investment Plan commits more than £5 billion to autonomous and uncrewed systems, including £1.6 billion specifically for drones, signalling that autonomous technologies are becoming central to the UK’s future military strategy.
IG’s client positioning data suggests investors have already been positioning for this trend, with holdings increasing across a range of defence companies exposed to drones, military electronics, AI and counter-drone technologies.
IG client positioning in defence and drone-related stocks
| Company | YoY change in client holdings |
| Red Cat | +197% |
| Northrop Grumman | +113% |
| RTX | +55% |
| BAE Systems | +28% |
| QinetiQ | +19% |
“The direction of travel has been clear for some time. The growth story isn’t sitting with any one manufacturer – it’s in the convergence of drones, autonomous systems, AI, digital warfare and the technologies designed to detect and defeat unmanned threats. That’s where defence budgets are increasingly being directed.”
“Our client positioning data suggests investors have already been recognising that shift. Over the past year we’ve seen growing exposure across a broad range of defence and drone-related companies, suggesting investors are looking beyond today’s headlines and positioning for what they see as a long-term structural trend. Rather than simply buying drone manufacturers, they’re increasingly investing across the technologies that make autonomous warfare possible.”
“That’s why the opportunity extends well beyond the pure-play names. Northrop Grumman is a good example of a larger defence contractor with deep unmanned exposure, from Global Hawk to Bat UAS and layered counter-UAS capabilities, allowing it to benefit from both drone deployment and the growing demand for drone defence. The wider investment theme is the ecosystem. Every increase in drone spending creates demand for sensors, communications, AI software, propulsion, electronic warfare and counter-drone systems. Companies such as Thales and BAE Systems are well placed because they sit across multiple parts of that value chain. Increasingly, the winners won’t simply be those building the drones, but those enabling, connecting, protecting and neutralising them.”
Angeline Ong, Senior Investment Analyst at IG
