According to the Financial Times, a broker for U.S. Defense Secretary Pete Hegseth attempted to make a multimillion-dollar investment in major defense companies prior to the outbreak of the Iran war. The broker, working at Morgan Stanley, reportedly contacted BlackRock in February about investing in its iShares Defense Industrials Active ETF, which holds approximately $3.1 billion in assets and includes companies such as RTX Corp (formerly Raytheon), Lockheed Martin, and Northrop Grumman among its largest holdings [1]. However, the investment did not proceed because the fund was not available for Morgan Stanley clients at that time, and it remains unclear whether the broker pursued other defense-related investments [1].
The Defense Industrials Active ETF has experienced a 12.4% decline over the past month, coinciding with the onset of the Iran war, according to LSEG data [1]. This suggests that despite the heightened geopolitical tensions, defense sector equities have not benefited from the conflict in the short term.
The Pentagon has strongly denied the Financial Times report. Chief spokesperson Sean Parnell called the article "entirely false and fabricated," demanding a retraction and stating that neither Hegseth nor his representatives approached BlackRock about any such investment. Parnell described the report as "yet another baseless, dishonest smear designed to mislead the public" [1].
The U.S. war against Iran has entered its fifth week, with no signs of resolution. U.S. Marines have been deployed to the region, and the Pentagon is reportedly preparing for extended ground operations in Iran. Former President Trump stated on Monday that the U.S. would "completely" destroy Iran's electric generating plants, oil wells, and Kharg Island if the Strait of Hormuz is not reopened and a peace deal is not reached soon [1].
CONCLUSION
The Financial Times report of a defense investment attempt by Secretary Hegseth's broker has been firmly denied by the Pentagon, with no evidence that the investment occurred. Despite ongoing conflict in Iran, defense sector ETFs have declined, indicating muted market reaction. The situation remains volatile, with U.S. military escalation and strong rhetoric from political leaders.