Morgan Stanley Broker Seeks Investment in Defense ETF for Secretary of Defense
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 8 hours ago
0mins
A Morgan Stanley (MS) broker for U.S. Secretary of Defense Pete Hegseth tried to make a major investment in big defense names in the weeks leading up to the U.S.-Israeli attack on Iran, the Financial Times' Paul Murphy, Harriet Agnew, Joshua Franklin, and James Politi report, citing three people familiar with the matter. The broker reached out to BlackRock (BLK) in February about investing millions of dollars in the asset manager's Defense Industrials Active ETF shortly before the U.S. launched strikes in Iran, the authors say. The inquiry on behalf of Hegseth was flagged internally at BlackRock, the authors note, citing people familiar with the matter. The aforementioned ETF's largest holdings include RTX (RTX), Lockheed Martin (LMT), and Northrop Grumman (NOC), all of which count the U.S. government as their biggest customers, as well as Palantir (PLTR), according to FT.
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Analyst Views on BLK
Wall Street analysts forecast BLK stock price to rise
10 Analyst Rating
8 Buy
2 Hold
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Strong Buy
Current: 933.850
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1354
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Current: 933.850
Low
1209
Averages
1354
High
1550
About BLK
BlackRock, Inc. is an investment management company. The Company provides a range of investment management and technology services to institutional and retail clients. Its diverse platform of alpha-seeking active, private markets, index and cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives, and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds, separate accounts, collective investment funds and other pooled investment vehicles. It also offers technology services, including the investment and risk management technology platform, Aladdin, Aladdin Wealth, eFront, and Cachematrix, as well as advisory services and solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Defense Secretary Investment Controversy: U.S. Defense Secretary Pete Hegseth's broker reportedly sought to make multimillion-dollar investments in major defense companies before the war, raising questions about potential insider trading, although the Pentagon has dismissed these claims.
- Trump's Tough Rhetoric: President Trump threatened to destroy Iran's oil wells and power plants if a peace deal is not reached, which has heightened market anxiety and complicated investor expectations regarding the conflict's trajectory.
- Fed's Inflation Outlook: Federal Reserve Chair Jerome Powell stated that inflation expectations remain grounded despite rising energy prices, suggesting that the central bank does not need to respond with higher interest rates, which could influence market perceptions of future monetary policy.
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- Conflict Escalation: With U.S. Marines arriving in the region, the Pentagon is preparing for weeks of ground operations in Iran, indicating a potential escalation of the conflict that could further impact defense industry investment sentiment.
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- Tax-Optimized Investment Strategies: Placing high-yield investments in retirement accounts like IRAs can avoid ordinary tax rates that are typically higher than capital gains rates, while utilizing a Roth IRA for high-growth assets allows for tax-free growth throughout one's lifetime, enhancing wealth accumulation efficiency.
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- Earnings Growth Expectations: UBS analysts are confident in BlackRock's growth trajectory, projecting low-to-mid-teens earnings growth and margin expansion, primarily driven by management fee growth, which will further bolster investor confidence.
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