IDEF vs. NATO

Last updated Jun 4, 2026

IDEF (iShares Defense Industrials Active ETF) and NATO (Themes Transatlantic Defense ETF) are both Aerospace & Defense funds. IDEF is actively managed, while NATO is passively managed. Over the past year, IDEF returned 21.86% vs 13.50% for NATO. Their correlation of 0.87 suggests significant overlap in exposure. IDEF charges 0.55%/yr vs 0.35%/yr for NATO.

Performance

IDEF vs. NATO - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in iShares Defense Industrials Active ETF (IDEF) and Themes Transatlantic Defense ETF (NATO). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, IDEF achieves a 4.74% return, which is significantly higher than NATO's 1.39% return.

IDEF

• 1D: -2.54%
• 1M: -2.65%
• YTD: 4.74%
• 6M: 9.45%
• 1Y: 21.86%
• 3Y*: —
• 5Y*: —
• 10Y*: —

NATO

• 1D: -1.87%
• 1M: 2.05%
• YTD: 1.39%
• 6M: 7.82%
• 1Y: 13.50%
• 3Y*: —
• 5Y*: —
• 10Y*: —

*Multi-year figures are annualized to reflect compound growth (CAGR)

IDEF vs. NATO - Yearly Performance Comparison

	2026 (YTD)	2025
IDEF iShares Defense Industrials Active ETF	4.74%	23.05%
NATO Themes Transatlantic Defense ETF	1.39%	17.30%

Correlation

The correlation between IDEF and NATO is 0.88, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.88
Correlation (All Time) Calculated using the full available price history since May 22, 2025	0.87

The correlation between IDEF and NATO has been stable across timeframes, ranging from 0.87 to 0.88 - a consistent structural relationship.

Return for Risk

IDEF vs. NATO — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

IDEF

IDEF Risk / Return Rank: 28
IDEF Sharpe Ratio Rank: 28
IDEF Sortino Ratio Rank: 28
IDEF Omega Ratio Rank: 26
IDEF Calmar Ratio Rank: 30
IDEF Martin Ratio Rank: 27

NATO

NATO Risk / Return Rank: 19
NATO Sharpe Ratio Rank: 19
NATO Sortino Ratio Rank: 20
NATO Omega Ratio Rank: 19
NATO Calmar Ratio Rank: 20
NATO Martin Ratio Rank: 19

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

IDEF vs. NATO - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for iShares Defense Industrials Active ETF (IDEF) and Themes Transatlantic Defense ETF (NATO). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	IDEF	NATO	Difference
Sharpe ratio: Return per unit of total volatility	1.04	0.65	+0.38
Sortino ratio: Return per unit of downside risk	1.56	1.07	+0.49
Omega ratio: Gain probability vs. loss probability	1.18	1.13	+0.06
Calmar ratio: Return relative to maximum drawdown	1.50	0.85	+0.65
Martin ratio: Return relative to average drawdown	3.90	2.19	+1.71
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

IDEF vs. NATO - Sharpe Ratio Comparison

The current IDEF Sharpe Ratio is 1.04, which is higher than the NATO Sharpe Ratio of 0.65. The chart below compares the historical Sharpe Ratios of IDEF and NATO, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	IDEF	NATO	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.04	0.65	+0.38
Sharpe Ratio (All Time) Calculated using the full available price history	1.33	1.34	0.00

Drawdowns

IDEF vs. NATO - Drawdown Comparison

The maximum IDEF drawdown since its inception was -14.63%, smaller than the maximum NATO drawdown of -15.99%. Use the drawdown chart below to compare losses from any high point for IDEF and NATO.

Drawdown Indicators

	IDEF	NATO	Difference
Max Drawdown Largest peak-to-trough decline	-14.63%	-15.99%	+1.36%
Max Drawdown (1Y) Largest decline over 1 year	-14.63%	-15.99%	+1.36%
Current Drawdown Current decline from peak	-12.31%	-12.30%	-0.01%
Average Drawdown Average peak-to-trough decline	-3.90%	-3.71%	-0.19%
Ulcer Index Depth and duration of drawdowns from previous peaks	5.61%	6.17%	-0.56%

Volatility

IDEF vs. NATO - Volatility Comparison

iShares Defense Industrials Active ETF (IDEF) and Themes Transatlantic Defense ETF (NATO) have volatilities of 7.87% and 7.97%, respectively, indicating that both stocks experience similar levels of price fluctuations. This suggests that the risk associated with both stocks, as measured by volatility, is nearly the same. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	IDEF	NATO	Difference
Volatility (1M) Calculated over the trailing 1-month period	7.87%	7.97%	-0.10%
Volatility (6M) Calculated over the trailing 6-month period	17.98%	17.65%	+0.33%
Volatility (1Y) Calculated over the trailing 1-year period	21.15%	20.71%	+0.44%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	21.07%	22.61%	-1.54%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	21.07%	22.61%	-1.54%

IDEF vs. NATO - Expense Ratio Comparison

IDEF has a 0.55% expense ratio, which is higher than NATO's 0.35% expense ratio.

Dividends

IDEF vs. NATO - Dividend Comparison

IDEF's dividend yield for the trailing twelve months is around 0.16%, less than NATO's 0.44% yield.

Position	TTM	2025	2024
IDEF iShares Defense Industrials Active ETF	0.16%	0.17%	0.00%
NATO Themes Transatlantic Defense ETF	0.44%	0.45%	0.08%

Frequently Asked Questions

Can I hold both IDEF and NATO in my portfolio?

IDEF and NATO have a correlation of 0.88, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, IDEF or NATO?

NATO has higher volatility (7.97%) compared to IDEF (7.87%). In terms of maximum drawdown, IDEF dropped -14.63% vs NATO's -15.99%.

Which ETF is better, IDEF or NATO?

On 1-year performance, IDEF leads with 21.86% vs 13.50% for NATO. On fees, NATO is cheaper at 0.35% per year. Their volatility is very similar. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, IDEF or NATO?

Over the 1-year period, IDEF has performed better with a 21.86% return vs 13.50%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, IDEF or NATO?

NATO is cheaper with a 0.35% expense ratio, compared with 0.55% for IDEF.

Which ETF pays a higher dividend yield, IDEF or NATO?

NATO has the higher dividend yield at 0.44%, compared with 0.16% for IDEF.

What is the main difference between IDEF and NATO?

They also come from different issuers: iShares and Themes. Their fees differ too: 0.55% for IDEF and 0.35% for NATO.

Which has better risk-adjusted returns?

IDEF currently has the higher Sharpe Ratio (1.04 vs 0.65), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.