Did U.S. Defense Secretary Attempt Controversial Defense ETF Investment Before Iran Airstrike?

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Allegations that the head of the U.S. Department of Defense tried to move into defense-related investments just before airstrikes on Iran sparked a controversy. The Pentagon quickly dismissed the report as false.

According to the Financial Times on the 30th, a Morgan Stanley broker representing U.S. Defense Secretary Pete Hegseth (46) contacted BlackRock, the world’s largest asset manager, last month to probe a potential multi-million-dollar investment in a defense-industry exchange-traded fund (ETF).

The inquiry reportedly came weeks before the United States and Israel launched military operations against Iran. The fund in question, the Defense Industrials Active ETF, targets companies expected to benefit from higher defense and security spending. Reported top holdings included RTX, Lockheed Martin, Northrop Grumman, and data firm Palantir — firms that count the Department of Defense among their major customers.

The FT said the inquiry attracted attention inside BlackRock as a “senior official’s investment query.” No actual investment was made. The fund, launched in May of last year, was not available to Morgan Stanley clients at that time.

The FT added that “even if the investment attempt never went through and short-term losses were avoided, the fact that the secretary’s team sought defense-industry investments while the Pentagon was preparing for a major military operation could fuel controversy.”

The Pentagon responded that the FT’s report alleging Secretary Hegseth’s team pushed to invest in the defense-industry ETF just before the strikes on Iran is not true.

On the 28th of last month, the U.S. and Israel carried out airstrikes on Iran. Secretary Hegseth is known for leading a hard-line Iran policy during the Trump administration and is viewed as one of the principal architects of this recent military operation.