At the 2026 NATO Summit in The Hague, member states vowed to spend 5% of GDP on defence by 2035, almost double what most were investing a decade ago. The announcement made headlines due to the sheer size of the promise but, more overlooked, was the confession buried within it; that these governments can’t pay for it themselves.

Defence spending commitments will leave between £1.7tn - £1.96tn ($2.3tn - $2.6tn) of capital projects unfunded by 2040, according to EY-Parthenon. Across Europe, the national debt of many NATO member states is quite notable. France’s national debt sits at almost 115% of GDP, Italy’s is 137%. Countries like these (which also include Spain, Denmark and Belgium) cannot simply spend their way through this problem.

As the fiscal sustainability of several members wavers, only Germany has historically had a rigorous fiscal policy, with a debt-to-GDP ratio below 100 (62.5 per cent). Policy frameworks, such as the UK’s Defence Investor’s Advisory Group, the EU’s Defence Equity Facility and JPMorgan’s $1.5tn Security and Resilience Initiative, have not emerged by pure coincidence, either. These entities bring private money into a space that, until recently, was considered a purely public sphere and, in doing so, have changed the landscape.

Some will say this is a geopolitical moment – a response to the growing tensions worldwide, and the fragility exposed since the global pandemic, but these are catalysts, though, not causes.

Western economies have operated on the assumption that globalisation was a one-way system. For the past 30 years, instead of being built on resilience, supply chains have been optimised for efficiency and defence spending fell as major conflict appeared unlikely. In doing so, capital priced in the risk accordingly. Today though, the prevailing view is that resilience is now one of a number of necessary, strategic investments to avoid future crises.

In 2025, more than 3,000 new trade and industrial policy measures were introduced worldwide. Governments are now treating critical minerals, energy grids and semiconductor supply chains as national security assets, instead of commercial logistics.

The Environmental, Social and Governance (ESG) consensus, which had previously kept institutional capital out of defence, is also fracturing. This brings into view the argument that if national security is a prerequisite to the stable societies that are the bedrock of ESG investing, then systematically excluding the assets that give us that security is an internal contradiction.

This is now, officially, the line taken by the European Commission. It has shifted its stance to officially align national security with the "Social" (S) pillar of ESG investing, arguing that security is a prerequisite for a stable society. Consequently, the previous, implicit, or automatic exclusion of defence assets from ESG-aligned portfolios is being re-evaluated, with regulators clarifying that investing in the defence sector is compatible with EU sustainable finance rules.

Defence, infrastructure and resilience are not three different investment themes, but are instead the same subject, viewed from different perspectives.

Now the red tape has been removed, the money funnelling into this sector is dilating. Private equity and venture capital investment in aerospace and defence assets reached $17.7bn in 2025, overtaking the previous year's record of $11bn.

• Defence
  In terms of direction for defence, multiple streams of investment are being explored. Some options are more established businesses, such as logistics contractors, maintenance providers, electronics manufacturers with long government contracts and predictable revenues. Others are travelling up to the technology layer – drones, autonomous systems, AI and cybersecurity – where the same capability works across both military and civilian applications, a trend seen in the $18bn valuation of drone start-up Helsing. Dual-use assets such as these are the bridge for the ESG-constrained investors.
• Infrastucture
  Global fundraising hit a record £200bn ($272bn) in 2025, and listed infrastructure beat global equities by 660 basis points in the 12 months to Q1. Despite this, the asset class still represents less than 1% of global AUM. An estimated $106tn of infrastructure investment is needed by 2040, as technological advancement exposes its limitations and accelerates the need for out-of-the-box thinking and creativity. This massive investment requirement, described as an "infrastructure moment", is driven by the need to upgrade existing ageing frameworks while simultaneously building new systems to support population growth, urbanisation, and the green energy transition.
• Critical Minerals
  These substances have become a defining feature of the global economy, with energy transition and Western rearmament both relying on lithium, cobalt and rare earth elements (REEs). China accounts for roughly 90% of the world’s rare earth refining capacity and 70% of natural graphite processing capacity, producing supply chain concentration risk for Western original equipment and manufacturers. The International Energy Agency (IEA) expects that from now to 2040, it’s predicted that between $500bn - $600bn of new mining investment will be needed. There is also a possibility that if faster decarbonisation occurs, that investment demand could reach $800bn.

Geopolitical uncertainty has become a key consideration in capital allocation for 84% of family offices. Political stability is the second according to Julius Baer’s Family Barometer for another year in a row, which comes as no surprise given the headlines worldwide of the past 24 months.

There lies a gap that needs to be attenuated between what sophisticated investors say keeps them awake at night and how their portfolios are constructed. According to JP Morgan, 70% of family offices have no infrastructure exposure.

Such fissures are narrowing, albeit slowly. The most pre-emptive of family offices are not speculating, but instead they're reacting to the same structural logic that's reshaping sovereign wealth funds and big institutions. In a world that has repriced geopolitical risk, portfolios built for a more stable era still require time to evolve.

The capital currently going into defence, infrastructure and resilience is not following a theme or a fleeting trend, but rather responding to a signal that's ushering in a fundamental restructuring of the economic landscape. Meanwhile the assets involved (security, physical, digital and mineral) are going through a significant revaluation, and are worth more than their previously discounted prices as the global landscape shifts.

For investors with truly long-term horizons, the question is not whether to engage with this shift, but whether a portfolio constructed for a world that no longer exists is still fit for purpose.