Procure Space ETF Gains 19% Since February 28 Iran Conflict Start, While Defense ETFs Decline 8-10%

The Procure Space ETF (UFO) has climbed almost 19% since the Iran War began on February 28, as of Thursday's close, according to data reported by CNBC. In contrast, the Global X Defense Tech ETF (SHLD) has fallen 8% over the same period, while the iShares US Aerospace & Defense ETF (ITA) is down 10%.

The Iran War, which started on that date, has influenced market movements in aerospace and defense sectors.

VettaFi's Cinthia Murphy told CNBC's 'ETF Edge' this week that more ETFs are now directly addressing the space theme, citing the Procure Space ETF (UFO) and Global X Defense Tech ETF (SHLD) as examples. She noted these funds incorporate elements like cybersecurity, satellites, communications and navigation. 'They have the cybersecurity element: Satellites, communications, navigation.

So, the defense theme is actually a very colorful theme nowadays. It has a lot of interesting names,' said Murphy, VettaFi's director of research. Murphy emphasized that the sector extends beyond traditional players.

'It really isn't just about Lockheed Martin and some of the traditional names that you find in ITA [iShares US Aerospace & Defense ETF],' she said. The top holdings of the iShares US Aerospace & Defense ETF (ITA) include GE Aerospace, RTX and Boeing, as listed on its website and reported by CNBC.

Investor interest in aerospace and defense stocks is expected to continue well beyond the resolution of the Iran War, according to Murphy.

'Any time you have geopolitical heat, it puts this kind of theme on the map,' she said. 'But it's another big growth area because there's so much new technology coming up and so much investment coming into this space. A lot of governments are making commitments for much more investments in the next five to ten years,' Murphy added.

Murphy pointed to the anticipated SpaceX initial public offering, largely expected in June, as a key driver of interest in space investments. 'One of the things we've spoken about the most this year is about space exploration and space investment given we're about to see the SpaceX IPO,' she said.

This historic interest in the SpaceX IPO is fueling even more enthusiasm in the space sector, Murphy suggested.

SS&C Technologies' Paul Baiocchi predicts that a ramp-up in defense budgets worldwide will deliver solid returns for the aerospace and defense group. He described convergence on limited scarce resources as a factor in this outlook. Baiocchi, the financial technology firm's head of fund sales and strategy, shared these views in the same CNBC interview.