Morgan Stanley Sees Huge Flows Into Defense as Funds Drop Limits

Funds with sustainable investing goals are set to become meaningful backers of the defense industry, as geopolitical tensions and outright war redefine what it means to be an ESG investor.

Morgan Stanley analysts now see sustainability funds based in Europe potentially adding somewhere between $38 billion and $71 billion of new money to global aerospace and defense stocks, according to a client note published on Wednesday. The estimate assumes that exposures rise in line with MSCI benchmark indexes.