Danish pension provider PFA has increased its investments in the defence sector almost tenfold since the outbreak of the war in Ukraine, rising to a high of DKK 7.7bn.

The fund’s holdings in defence-related companies have grown from DKK 793m at the start of Russia’s invasion in February 2022 – an increase of 872 per cent – marking one of the most significant shifts in its responsible investment strategy in recent years.

While the expansion covers both US and European firms, the growth has been particularly pronounced in Europe.

PFA’s investments in European defence companies have risen by 1,650 per cent since early 2022, with the portfolio now roughly evenly split between European and American holdings.

The pension fund has invested in companies such as Airbus, Kongsberg, Saab, Safran, Thales, and Leonardo.

“It is quite an unusual development that we have seen, where defence investments have boomed to such an extent,” said PFA director of responsible investments, Rasmus Bessing.

“When the world develops, PFA does the same, and that is why we are now investing far more in defence than we have previously,” he added.

One of the key factors behind the change has been a revision of PFA’s exclusion policy.

Although the fund continues to exclude firms involved in controversial weapons such as cluster munitions, it can now invest in companies supplying components for Europe’s nuclear deterrence programmes.

“There is a great political desire for European reinforcement, and this is primarily why many of the large European companies have now entered our portfolio,” Bessing explained.

“The development is taking place against a sad backdrop, but the geopolitical situation and the desire for reinforcement make it necessary for us to assume social responsibility while ensuring financial security for our customers.”

The strategic shift has also been highly profitable for Danish pension savers.

PFA’s defence investments have returned 371 per cent between January 2022 and October 2025, compared with a 38 per cent increase in the broad world index over the same period.

“We have seen some great growth figures, and there is a huge amount of attention on it,” Bessing said.

“We don’t think we will see such high increases in the next few years, but the great focus on European armament is something that will last several years into the future.”

Alongside PFA’s growing allocations, many of the fund’s self-investing customers have also increased their exposure to defence through two dedicated defence-focused investment funds.

Customers who do not wish to be invested in the sector, however, can opt out.

The latest figures reflect a broader trend, with the Danish pensions industry doubling its holdings in defence companies from 2023 to 2024, according to figures from Insurance and Pension Denmark (I&P Denmark).

The research showed that the defence industry is now taking up a larger share of Danish pension savers' portfolios, as defence investments increased from just over DKK 9bn to almost DKK 19bn from January 2023 to April 2024.

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