- US Defence Secretary Hegseth's broker sought defence ETF investment before US-Israel Iran strike
- Pentagon denied the report, calling it false and demanded retraction
- BlackRock's Defence Industrials ETF includes major US defence companies like Lockheed Martin
US Defence Secretary Pete Hegseth's broker attempted to make a big investment in major defence companies in the weeks leading up to the US-Israeli attack on Iran, the Financial Times reported, citing people familiar with the matter. The Pentagon has, however, called the report "entirely false and fabricated" and demanded its retraction.
According to the FT report, Hegseth's broker at Morgan Stanley approached BlackRock in February, days before the US-Israeli strikes on Iran, about making a multimillion-dollar investment in the asset manager's Defence Industrials Active ETF.
The inquiry on behalf of the high-profile potential client was flagged internally at BlackRock, the report said. The publication did not specify how much discretion the broker had to make investments on Hegseth's behalf, or whether Hegseth knew what the broker was doing.
It, however, added that the investment did not ultimately go ahead, as the fund, which launched in May last year, was not yet available for Morgan Stanley clients to buy.
According to BlackRock, the Nasdaq-listed $3.2 billion equity fund pursues "growth opportunities by investing in companies that may benefit from increased government spending on defence and security amid geopolitical fragmentation and economic competition".
Its largest holdings reportedly include major defence conglomerates-- RTX, Lockheed Martin and Northrop Grumman-- which count the US Department of Defence as their biggest customers, as well as data integration specialist Palantir.
The fund, which carries the ticker IDEF, has risen 28 per cent over the past year but has not risen on the Middle East war, falling almost 13 per cent in the past month.
So far, neither BlackRock nor Morgan Stanley has released any statement on the matter.
Pantagon's Denial
Soon after the publication of the report, Sean Parnell, chief Pentagon spokesperson, took to the social media site X and wrote, "This allegation is entirely false and fabricated."
"Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment," he added, demanding the retraction of the report.
The report on the investment attempt comes amid a wider scrutiny of trades made in financial and prediction markets ahead of US President Donald Trump's major policy decisions. Some of these decisions have been preceded by well-timed bets, leading some experts to raise questions about whether information had somehow leaked ahead of time.
US Defence Chief Advocated For War
Hegseth is among the chief architects of the Iran war, who often flaunt the US's military might. Last week, US President Donald Trump appeared to place responsibility for the decision to launch military strikes against Iran on his defence secretary.
Speaking at a public event in Tennessee on March 23, Trump suggested Hegseth had been the first senior official in his administration to advocate military action against Iran.
"Pete, I think you were the first one to speak up, and you said, 'Let's do it because you can't let them have a nuclear weapon,'" Trump had said, with Hegseth seated beside him at the event.
