EXCLUSIVE: Nobody Believed A 100% International ETF Could Beat 1,000+ Rivals, Until This CEO Proved Them Wrong — His Mantra? 'Precision Over Breadth'

In an era where passive investing and broad-market ETFs dominate headlines, one fund has shattered expectations. The Select STOXX Europe Aerospace & Defense ETF (EUAD) surged 46% year-to-date in 2025, outpacing over 1,000 rivals—including its nearest competitor, the iShares MSCI Poland ETF (EPOL), which returned 39%. At the helm is CEO Matthew Tuttle of Tuttle Capital Management, whose mantra—“Precision over breadth”—has turned geopolitical tensions into profit.

The Bet on Defense: How Narrow Focus Yielded Massive Gains

Tuttle’s strategy hinges on a single, razor-sharp thesis: European defense spending will explode. With NATO’s cohesion strained and Russia’s military actions destabilizing the region, governments like Germany and Poland are pouring billions into military modernization. The EUAD tracks 13 European aerospace and defense firms—Airbus, Safran, and Rolls-Royce among them—directly tied to this trend.

While the S&P 500 slumped 3.2%, EUAD’s focus on a high-growth niche paid off. Tuttle’s “precision” approach contrasts sharply with broader funds like the Vanguard Total International Stock ETF (VXUS), which returned just 9.2% despite its 8,600 holdings. “Investors often mistake diversification for safety,” Tuttle told Financial Times in May 2025. “But in turbulent markets, concentration on the right theme is the real hedge.”

The Geopolitical Tailwind

The fund’s success isn’t accidental. Since 2023, European defense budgets have grown at a blistering pace: Germany’s €500 billion infrastructure and defense plan, Poland’s 4% GDP growth fueled by EU subsidies, and France’s push for tech-independent military systems all feed into EUAD’s returns. Even geopolitical risks—like U.S.-NATO friction—became tailwinds, as Europe accelerated self-reliance in defense tech.

Tuttle’s foresight was further validated by sector-specific drivers. The STOXX Europe Total Market Aerospace & Defense Index, which EUAD tracks, rose 44% in 2025, outperforming broader European benchmarks like the STOXX 600 (up 8%). The fund’s low 0.50% expense ratio also gave it a cost advantage over actively managed peers, such as the First Trust Germany AlphaDEX Fund (FGM), which charges 0.80%.

Risks and the Contrarian Play

Critics argue that EUAD’s narrow focus makes it vulnerable to sector-specific shocks, such as a sudden drop in defense spending or supply-chain disruptions. Yet Tuttle counters that the ETF’s passive indexing—rebalancing quarterly to reflect market shifts—mitigates this. “We’re not picking stocks; we’re capturing a structural trend,” he said.

Meanwhile, the fund’s liquidity (356,000 shares traded daily) and $500 million AUM as of May 2025 signal growing institutional confidence. Even skeptics must acknowledge the data: among 100% foreign-holding ETFs, only Poland’s EPOL came close to EUAD’s returns, and it lacked the defense-sector specificity that insulated it from tech and energy market slumps.

Conclusion: The New Rules of ETF Investing

Matthew Tuttle’s EUAD isn’t just a fund—it’s a case study in thematic investing’s potential. By zeroing in on a single, high-conviction theme (European defense), it bypassed the noise of broader markets. With geopolitical spending likely to remain elevated and European tech firms leading in drone systems, AI targeting, and hypersonic tech, EUAD’s playbook could redefine how investors approach international equities.

The numbers speak plainly: in 2025, precision beat breadth. And as Tuttle’s ETF proves, sometimes the smallest bets—when placed with surgical accuracy—yield the largest rewards.