NATO vs. IDEF

Last updated Jun 4, 2026

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

Performance

NATO vs. IDEF - Performance Comparison

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

Returns By Period

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

NATO

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

IDEF

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

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

NATO vs. IDEF - Yearly Performance Comparison

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

Correlation

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

Return for Risk

NATO vs. IDEF — Risk / Return Rank

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

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

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

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.

NATO vs. IDEF - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Themes Transatlantic Defense ETF (NATO) and iShares Defense Industrials Active ETF (IDEF). 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.

	NATO	IDEF	Difference
Sharpe ratio: Return per unit of total volatility	0.65	1.04	-0.38
Sortino ratio: Return per unit of downside risk	1.07	1.56	-0.49
Omega ratio: Gain probability vs. loss probability	1.13	1.18	-0.06
Calmar ratio: Return relative to maximum drawdown	0.85	1.50	-0.65
Martin ratio: Return relative to average drawdown	2.19	3.90	-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.

NATO vs. IDEF - Sharpe Ratio Comparison

The current NATO Sharpe Ratio is 0.65, which is lower than the IDEF Sharpe Ratio of 1.04. The chart below compares the historical Sharpe Ratios of NATO and IDEF, 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

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

Drawdowns

NATO vs. IDEF - Drawdown Comparison

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

Drawdown Indicators

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

Volatility

NATO vs. IDEF - Volatility Comparison

Themes Transatlantic Defense ETF (NATO) and iShares Defense Industrials Active ETF (IDEF) have volatilities of 7.97% and 7.87%, 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

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

NATO vs. IDEF - Expense Ratio Comparison

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

Dividends

NATO vs. IDEF - Dividend Comparison

NATO's dividend yield for the trailing twelve months is around 0.44%, more than IDEF's 0.16% 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 NATO and IDEF in my portfolio?

NATO and IDEF 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, NATO or IDEF?

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

Which ETF is better, NATO or IDEF?

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, NATO or IDEF?

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, NATO or IDEF?

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

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

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

What is the main difference between NATO and IDEF?

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

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.