As the Albanese government faces mounting pressure from US President Donald Trump to increase Australia’s defence budget, local investors have been busy riding this year’s hottest trade: war stocks.

ASX-listed global defence exchange-traded funds have been among this year’s best performing ETFs, boosted by the Trump administration’s push for its Western allies to shoulder more of the military bill. That has benefited global defence companies which have experienced a wave of new orders and government contracts from nations around the world.