LONDON (Reuters) - Fund manager VanEck's defence-industry focused exchange traded fund (ETF) has reached more than $550 million in net assets in its first year, VanEck said on Monday, highlighting how current, global conflicts have driven investors to the defence sector.

The New York-headquartered firm launched its VanEck Defense UCITS ETF at the end of March 2023. The ETF is up around 20% in 2024, and has reached around $560 million in net assets within a year.

The war in Ukraine and the conflict between Israel and Hamas, which has also drawn in Iran, has led many governments to call for more military spending.

In April, British Foreign Minister David Cameron called for NATO allies to bolster defence spending and production to support Ukraine against Russia, while Israel has also amended its budget to add more spending on defence.

"Traditionally, the defence industry has been a rather sensitive topic, especially in Europe. However, the outbreak of war in Ukraine and other areas of tension and conflict around the world have changed the way many people view defence policy," said VanEck Europe CEO Martijn Rozemuller.

The ETF's top holdings are French stocks Thales and Safran, while others include Italian company Leonardo and U.S. defence technology company Booz Allen Hamilton ( BAH ).

Earlier this month, Goldman Sachs' strategists said they were not recommending European defence stocks due to their recent outperformance, with the STOXX Europe aerospace and defence index up around 27% in 2024 - outpacing a 5% percent gain for the broader STOXX Europe index.

Nevertheless, APICIL Asset Management fund manager Gregoire Laverne said defence stocks remained long-term top picks, given the global, political situation.

"We think defence remains a must-have in fund managers' portfolios, given how governments not only in Europe but across the world are not stopping in their increases to military spending," added Laverne, whose firm owns Thales and Safran.