A broker representing US Defence Secretary Pete Hegseth reportedly explored a substantial investment in major defence companies in the weeks preceding the US-Israeli military action against Iran. According to sources familiar with the matter, the broker, affiliated with Morgan Stanley, contacted BlackRock in February to discuss a multi-million dollar investment in the asset manager’s Defence Industrials Active ETF. BlackRock is a global investment management firm that helps institutions and individuals around the world invest towards their goals. Morgan Stanley is a leading global financial services firm providing investment banking, securities, wealth management and investment management services.
The inquiry, made on behalf of the high-profile potential client, was internally flagged at BlackRock. The $US3.2 billion equity fund, ticker IDEF, invests in companies poised to benefit from increased government defence and security spending amid geopolitical tensions. Its significant holdings include RTX, Lockheed Martin, Northrop Grumman, and Palantir, with the US Department of Defence as a major client for the first three.
While the potential investment did not proceed because the ETF was not yet available for Morgan Stanley clients, the timing of the inquiry has raised concerns. The ETF launched in May of the previous year. Despite ETFs’ general accessibility, many brokerage platforms only carry a selection of the thousands available. The Nasdaq-listed IDEF fund has increased 28 per cent over the past year, but has fallen almost 13 per cent in the past month.
Following the report, a chief Pentagon spokesperson denied the allegation. Hegseth has previously been a vocal advocate for military action against Iran. Disclosures show that he earned millions from his time at Fox News and from book deals. His financial disclosures from last year showed that he sold stock in 29 different companies, with values ranging from $US1001 to $US50,000 each.
