In an Age of Big Government, Where Public Money Leads Profits Can Follow
20 October 2025
It used to be that small government and the free market were considered a good thing. During the past 15 years, though, governments have been getting increasingly interventionist with implications for how we invest.
Think of a wave of industrial subsidies, soaring defense spending, expanding space programs and a broad nuclear revival. What’s more, government intervention is arguably underpinning the rising gold price, with central bank buying consistently high.
What does that mean for how we invest? Where big government has been spending its money in recent years, investors have been wise to follow. After all, governments have huge spending power that’s often multiplied by follow-on private sector capital expenditure. Their interventionist policies can transform a sector’s growth prospects – where government money goes, stock price rises may soon follow. There is no guarantee that government spending will result in higher stock prices or positive returns for investors. High returns may not be achieved, and your entire investment is at risk of loss.
This phenomenon is partly the result of a new era of intense geopolitical competition. Governments around the globe are shifting their investment priorities and controls to what they believe is needed for nation states to compete in the 21st century.
How intervention has driven stock price gains
While past developments show that sectors supported by government spending have experienced notable growth, such outcomes are not guaranteed and may not necessarily recur. Government intervention can influence business activity and asset prices — as seen in areas such as defense, space, nuclear energy, and gold — but these markets remain subject to volatility and the risk of capital loss.
Turn first to defense. In 2024, global military spending rose for 10th consecutive year to reach $2.7 trillion, driven by the Russia-Ukraine war and other armed conflicts and geopolitical tensions, according to the respected Stockholm International Peace research Institute (SIPRI).1 This is the highest level SIPRI has ever recorded. How have equities reflected rocketing defense spending? Taking the VanEck Defense UCITS ETF as a proxy, it rose 60% p.a. in the 30 months between launch on 31 March 2023 and the end of September 2025, outperforming broad equity markets. Of course, past performance does not predict future returns and as a word of caution, much of this rise is in anticipation of orders for defense equipment to come rather than those already booked.
VanEck Defense UCITS ETF – Performance History (%)
| 1 MO* | 3 MO* | YTD* | 1 YR | 3 YR | 5 YR | 10 YR | ETF INCEPTION | |
| ETF | 12.50 | 15.46 | 80.68 | 88.45 | -- | -- | -- | 60.19 |
| MVDEFTR (Index) | 12.61 | 15.58 | 81.40 | 89.33 | -- | -- | -- | 61.00 |
| Performance differential (ETF – Index) | -0.11 | -0.12 | -0.72 | -0.88 | -- | -- | -- | -0.81 |
Data as of 30 Sep 2025. Past performance does not predict future returns. *Periods greater than one year are annualised. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KID before investing, which are available at the Document section of the fund on www.vaneck.com.
Main Risk Factors: Equity Market Risk, Liquidity Risks, Industry or Sector Concentration Risk.
The accelerating arms race extends to space, where government spending surged by 10% in 2024 to a record $135 billion.2 Much of this was directed toward defense applications, ranging from secure communications and GPS to advanced surveillance systems and missile defense.
Military spending reaches new highs
World military expenditure, by region, 1988–2024
Note: The absence of data for the Soviet Union in 1991 means that no total can be calculated for that year. Source: SIPRI Military Expenditure Database, Apr. 2025
In this case, the VanEck Space Innovators UCITS ETF offers a guide to stock price performance. In the past 12 months, it has increased by 109.02%, again to 30 September.
VanEck Space Innovators UCITS ETF – Performance History (%)
| 1 MO* | 3 MO* | YTD* | 1 YR | 3 YR | 5 YR | 10 YR | ETF INCEPTION | |
| ETF | 4.75 | 22.93 | 68.04 | 109.02 | 46.59 | -- | -- | 37.63 |
| MVSPCTR (Index) | 4.76 | 23.07 | 68.74 | 110.22 | 47.40 | -- | -- | 38.40 |
| Performance differential (ETF – Index) | -0.01 | -0.14 | -0.70 | -1.20 | -0.81 | -- | -- | -0.77 |
Data as of 30 Sep 2025. Past performance does not predict future returns. *Periods greater than one year are annualised. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KID before investing, which are available at the Document section of the fund on www.vaneck.com.
Main Risk Factors: Foreign Currency Risk, Industry or Sector Concentration Risk, Risk of Investing in Emerging Markets Issuers.
Note than big government is not the only factor, as private companies are rapidly building out low earth satellite constellations. While historical data shows a possible relationship between government spending and market movements, any potential returns are uncertain and subject to market risk.
Nuclear is another industry benefiting from government policy. Countries as diverse as the US, Denmark, Germany, Belgium, the Netherlands and the UK are in a dash for atomic energy as they seek to solve three problems. They’re looking to build out nuclear energy capacity to fuel artificial intelligence, foster energy security and decarbonize power generation.
Governments’ actions to boost nuclear power generation are reflected in the performance of our VanEck Uranium and Nuclear Technologies UCITS ETF, which has risen 81% year-to-date at the end of September.
VanEck Uranium and Nuclear Technologies UCITS ETF – Performance History (%)
| 1 MO* | 3 MO* | YTD* | 1 YR | 3 YR | 5 YR | 10 YR | ETF INCEPTION | |
| ETF | 15.86 | 27.16 | 80.69 | 84.20 | -- | -- | -- | 50.74 |
| MVNUCLTR (Index) | 15.92 | 27.34 | 81.51 | 85.36 | -- | -- | -- | 51.47 |
| Performance differential (ETF – Index) | -0.06 | -0.18 | -0.82 | -1.16 | -- | -- | -- | -0.73 |
Data as of 30 Sep 2025. Past performance does not predict future returns. *Periods greater than one year are annualised. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KID before investing, which are available at the Document section of the fund on www.vaneck.com.
Main Risk Factors: Liquidity Risks, Investing in Natural Resources Companies, Industry or Sector Concentration Risk.
Lastly, government intervention is underpinning the gold price. In a time of intense geopolitical competition, and with questions over US Federal Reserve independence, central banks are buying more gold for their reserves. Data released earlier in 2025 by the European Central Bank showed that gold passed the euro to become the central banks’ second-largest reserve asset.3
Gold is now the second most important reserve currency for central banks
Percentages, at current market prices
Source: IMF, World Gold Council and ECB staff calculations (2025)
Against a backdrop of high demand and tight supply, the gold price has increased by more than 50% in 2025, exceeding $4,000 an ounce, as of September 30th 2025. As investors gain confidence that gold miners profit from the gold price development, the VanEck Gold Miners UCITS ETF has risen 125% in the same timeframe.
VanEck Gold Miners UCITS ETF – Performance History (%)
| 1 MO* | 3 MO* | YTD* | 1 YR | 3 YR | 5 YR | 10 YR | ETF INCEPTION | |
| ETF | 21.49 | 46.89 | 124.92 | 93.56 | 48.98 | 15.67 | 19.76 | 14.84 |
| MVGDXTR (Index) | 21.56 | 47.11 | 125.87 | 94.56 | 49.74 | 16.19 | 20.31 | 15.36 |
| Performance differential (ETF – Index) | -0.07 | -0.22 | -0.95 | -1.00 | -0.76 | -0.52 | -0.55 | -0.52 |
Data as of 30 Sep 2025. Past performance does not predict future returns. *Periods greater than one year are annualised. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KID before investing, which are available at the Document section of the fund on www.vaneck.com.
Main Risks Factors: Risk of Investing In Natural Resources Companies, Industry or Sector Concentration Risk, Risk of Investing in Smaller Companies.
The case for asset allocation through ETFs
What all of this suggests is that if government spending continues to shape markets so strongly, investors may find it more effective to capture such macro trends through broad asset allocation rather than traditional stock picking. Many seem to be doing so, as the VanEck Defense UCITS ETF, for example, has grown significantly to $7.7 billion as of September 2025.
That said, investors should remain mindful of valuation and policy risks. Periods of strong government support can lead to elevated valuations across certain sectors, while reduced policy backing may cause some companies to adjust from those levels. These dynamics can affect both ETF-based and single-stock investments, underscoring the importance of setting realistic expectations around performance and volatility.
It’s undoubtedly a new era, though, of far greater government intervention leading stock prices. In this environment, asset allocation via ETFs offers a practical way to participate in structural trends, while maintaining broad diversification and a long-term perspective.
1 Trends in world military expenditure 2024, SIPRI. April 2025.
2 Novaspace (2025, May 5). Defense spending drives government space budgets to historic high.
3 European Central Bank. (2025, June). Gold demand: the role of the official sector and geopolitics.
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