US Defense Secretary Pete Hegseth's Broker Looked To Invest In Defence Fund Before Iran Attack

Last Updated:March 31, 2026, 07:04 IST

A broker representing US Defence Secretary Pete Hegseth explored a multimillion-dollar investment in a BlackRock defence-focused ETF shortly before the US-Israeli strike on Iran.

A broker representing US Defence Secretary Pete Hegseth explored a potential multimillion-dollar investment in a defence-focused exchange-traded fund (ETF) in the weeks preceding the US-Israeli military action against Iran, according to a report by the Financial Times, citing three people familiar with the matter.

As reported by Reuters and attributed to the Financial Times, the broker, working through Morgan Stanley, contacted BlackRock in February regarding a possible allocation to the asset manager’s Defence Industrials Active ETF (IDEF), a fund designed to track companies expected to benefit from rising global defence and security spending.

According to the Financial Times, the inquiry was flagged internally at BlackRock because of the high-profile nature of the prospective client. BlackRock, Morgan Stanley and the Pentagon declined to comment on the specifics of the reported discussions.

Pentagon spokesperson Sean Parnell disputed the claims, calling the report “entirely false and fabricated" in a statement posted on X, and demanded a retraction, Reuters reported. The Financial Times report, however, cited sources who said the approach was made on behalf of a potential client interested in gaining exposure to defence-linked equities amid escalating geopolitical tensions.

The proposed investment did not move forward because the ETF, which launched in May last year, was not yet available for purchase through Morgan Stanley’s brokerage platform at the time of the inquiry, according to Reuters, citing the Financial Times. The report did not specify whether alternative defence-sector investment vehicles were subsequently considered.

According to ANI, which cited Reuters and the Financial Times, BlackRock’s Defence Industrials Active ETF manages approximately USD 3.2 billion in assets and focuses on companies positioned to benefit from sustained government spending on defence, intelligence, cybersecurity and military technology. The fund’s top holdings include major US defence contractors such as RTX, Lockheed Martin and Northrop Grumman, along with data analytics firm Palantir, companies that maintain significant commercial relationships with the US defence establishment.

The Financial Times report did not clarify how much discretion the broker had to act on Hegseth’s behalf or whether the defence secretary had prior knowledge of the proposed investment inquiry. The report also did not indicate that any transaction ultimately took place.

The development comes amid wider scrutiny of trading activity in financial markets ahead of significant policy announcements by US President Donald Trump’s administration, according to Reuters. Some analysts and market observers have noted instances of well-timed investment positioning ahead of geopolitical developments, prompting debate about market sensitivity to policy signals and the potential implications for transparency.

According to the Financial Times, exchange-traded funds such as IDEF are widely used by institutional and high-net-worth investors because of their relatively lower fees, tax efficiency and liquidity, allowing them to be traded similarly to individual equities. However, brokerage platforms typically offer access only to a portion of the thousands of ETFs available globally, which can sometimes affect investment timing and execution.

The reported inquiry has drawn attention because it coincided with a period of heightened geopolitical tensions in West Asia, following US-Israel military strikes on Iran. Market participants often monitor defence-sector stocks and thematic funds during such periods, as increased government spending on military capability can influence sectoral performance.

While the Pentagon has strongly denied the report, the Financial Times said the internal flagging of the inquiry at BlackRock underscores the level of sensitivity associated with investment activity connected to senior government officials overseeing national security policy.

News world US Defense Secretary Pete Hegseth's Broker Looked To Invest In Defence Fund Before Iran Attack

Read More