The United States accounts for 53.4% of the market capitalization of the universe analyzed; Europe, 29.2%; and China, 5.9%. Shareholding overlap across firms is much greater in the United States. In Europe, 86.7% of that overlap comes from U.S. investors.

The defense industry is undergoing extraordinary expansion. The Stockholm International Peace Research Institute (SIPRI) estimates that global military expenditure reached $2.887 trillion in 2025, up 2.9% in real terms and marking the 11th consecutive year of growth. In Europe, the increase was much larger, at 14%. At the same time, European Union Member States are expected to spend €454 billion on defense in 2026, 75.3% more than in 2021. The usual question is which countries manufacture the weapons, aircraft, radars, or electronic systems. There is another, less frequently examined question: who owns the capital of the companies that produce them?

To answer it, the analysis uses all publicly listed companies in the Capital IQ database whose primary industry classification is "Aerospace & Defense" and for which market capitalization data are available. There are 364 companies, with a combined market value of $3.12 trillion. The exercise is not intended to measure the entirety of global defense industrial capacity, since it excludes private companies and unlisted state-owned groups, a limitation that is particularly important in the case of China. What it does allow is a fairly precise analysis of how ownership is distributed across the listed segment of the industry and of the implications that can be drawn from it, particularly for Europe.

By country of incorporation, U.S. companies account for 53.4% of the sample's market capitalization. Europe, defined here as the EU-27 plus the United Kingdom, Norway, and Switzerland, represents 29.2%. China accounts for 5.9%. The rest of the world accounts for 11.4%.

U.S. dominance is even more visible when the focus shifts from the company's domicile to that of its largest shareholders. The identified holdings of U.S. investors are equivalent to 31.6% of the market capitalization of the entire listed industry analyzed. This figure is especially significant given that Capital IQ reports each company's largest shareholders, not its entire shareholder base.

Within the portion of ownership for which a country can be assigned, U.S. investors account for 61.8%. France ranks second, with 7.3% of identified ownership, followed by China, with 5.9%.

Table 1. Distribution of aerospace and defense industry market value by shareholder country.

The comparison among the United States, Europe, and China is probably the most interesting result. For U.S. companies, approximately 48.4% of equity ownership is identified. Within that portion, 91.7% belongs to U.S. investors. The U.S. market is therefore international in its financial flows, but the visible ownership of its defense companies remains overwhelmingly domestic.

Europe is different. For European companies, 53.5% of equity ownership is identified. European investors account for 29.0% of the total market capitalization of these companies, while U.S. investors account for 22.4%. Put differently, if we look only at ownership whose origin can be identified, 54.3% is European and 41.9% is U.S. A company can be French, German, British, or Italian while at the same time having a very substantial share of its identifiable publicly traded equity held by U.S. investors.

China shows the opposite pattern. Identified Chinese shareholders account for 50.4% of the market capitalization of the Chinese companies in the sample and 88.3% of all identified ownership in that group. U.S. investors account for just 0.23% of the market capitalization of this block. The financial separation between China and the West is therefore much greater than that between the United States and Europe.

The second major conclusion emerges when shareholders are ranked by the aggregate value of their holdings. BlackRock appears in 135 companies, and its positions are equivalent to 6.53% of the sample's global market capitalization. Vanguard appears in 141 and accounts for 4.58%. State Street accounts for 3.19%. Taken together, the three large U.S. asset managers manage positions equivalent to 14.3% of the market value of the 364 companies. Adding Capital Group raises the figure to 18.7%.

The pattern is even more pronounced among U.S. companies. At Lockheed Martin, State Street is listed as a shareholder with 14.29%, Vanguard with 8.5%, and BlackRock with approximately 8.18%. At RTX, Vanguard holds 9.03%, BlackRock 8.20%, and State Street 7.08%. At Northrop Grumman, Vanguard holds 9.4%, State Street 9.27%, BlackRock 8.29%, and Capital Research and Management Company 8.25%. In short, the same asset managers repeatedly appear among the largest shareholders of companies competing for military contracts and programs.

This phenomenon has a name in the academic literature: common ownership. It exists when the same investor simultaneously holds stakes in several competing firms. It does not mean that one company owns another, nor does it show that asset managers coordinate corporate decisions. It describes an ownership structure in which the same shareholders are present on both sides of the competitive relationship.

Using the sample data, the following calculation is performed. For each pair of companies, shareholder by shareholder, the smaller of the two stakes is taken and all such minima are added together. If an asset manager owns 8% of one company and 6% of its rival, its contribution to the overlap is six percentage points. The indicator is then calculated for all 66,066 possible pairs of companies and weighted by the market capitalization of the two companies in each pair. It is not the MHHI-Delta used in part of the antitrust literature (see José Azar, Martin C. Schmalz, and Isabel Tecu (2018), "Anticompetitive Effects of Common Ownership," published in Journal of Finance), but rather an intuitive measure of how many percentage points of visible ownership are held by the same investors.

The result differs sharply across regions. In the United States, weighted overlap reaches 26.3 percentage points. In Europe, it is 13.0. In China, 5.4. Between a U.S. and a European company, weighted overlap is 15.2 points. Between a U.S. and a Chinese company, it falls to just 0.21 points; between Europe and China, to 0.17. The financial map of Western defense is therefore much more integrated within the West than it is with China.

In the United States, almost all measured common ownership comes from institutional investors. BlackRock contributes 7.45 points to weighted overlap, Vanguard 5.83, and State Street 4.08. Together, the Big Three explain approximately two-thirds of the U.S. indicator. The logic is that of large diversified portfolios that simultaneously own stakes across virtually the entire market.

Europe produces an even more striking result. Of the 13.0 points of weighted common ownership, 11.3 come from U.S. investment groups, approximately 86.7% of the total. BlackRock contributes 4.05 points, Capital Group 2.91, and Vanguard 2.35. European governments retain significant strategic stakes in some companies, and there are stable industrial shareholders, but the layer of common ownership linking rival firms is predominantly U.S.-based.

China has a different ownership architecture. There, common ownership is less dominated by large global asset managers and much more by domestic industrial groups and strategic corporations. Of the 5.43 points of weighted overlap, approximately 3.56 come from strategic corporate shareholders.

Here, the data should be distinguished from their interpretation. The fact that the same asset managers appear in Boeing, Lockheed, RTX, Northrop Grumman, or General Dynamics does not prove coordination or collusion. The academic literature continues to debate whether common ownership can reduce incentives to compete, alter executive compensation, or influence corporate governance.

The most relevant starting point for interpreting these results is the paper by Miguel Antón, Florian Ederer, Mireia Giné, and Guillermo Ramirez-Chiang, "Common Ownership Around the World." The authors study 49 countries between 2005 and 2019 and document that common ownership is widespread and increasing, although the United States remains far above the rest. The increase is particularly pronounced among larger firms. Moreover, it is explained not only by the growth of institutional investment, but also by its concentration in a small number of asset managers. BlackRock, Vanguard, and State Street, the so-called Big Three, play a central role, particularly in the United States. This aggregate result aligns remarkably closely with what emerges when the aerospace and defense industry is examined in isolation: common ownership is highest precisely in the U.S. market and is concentrated among the largest companies by market capitalization.

Antón and his coauthors do not establish that common ownership by itself produces an anticompetitive outcome. Their contribution is primarily to show that the architecture of global share ownership has changed and that the phenomenon is sufficiently widespread that competition, corporate governance, and regulation can no longer be analyzed solely firm by firm.

The first potential implication concerns the intensity of competition. The aerospace and defense industry has several characteristics that make this issue particularly relevant: concentrated markets, few public-sector buyers, programs that last for decades, high switching costs, and contracts in which two or three companies repeatedly compete with one another. For a diversified shareholder holding significant stakes in all the rivals, the economic return on the portfolio depends less on which individual company wins a contract and more on the combined profitability of the sector. This does not mean that the asset manager pressures companies to reduce competition, but it does change the corporate governance question: to what extent do incentive systems, voting decisions, and engagement with boards encourage aggressive rivalry among companies, or a more stable maximization of the value of the portfolio as a whole? The literature shows that these channels may exist. Miguel Antón, Florian Ederer, Mireia Giné, and Martin Schmalz (2023), "Common Ownership, Competition, and Top Management Incentives," published in Journal of Political Economy, find, for example, that greater common ownership is associated with managerial incentives that are less sensitive to the firm's relative performance. Extrapolating that result to the aerospace and defense industry requires industry-specific evidence, but the mechanism is economically plausible and deserves further study.

The second implication concerns innovation, and here the effect can run in both directions. Defense is one of the sectors with the largest technological externalities: sensors, communications, semiconductors, artificial intelligence, materials, engines, or space technology developed by one company may ultimately benefit other firms and entire supply chains. A common owner may internalize some of these spillovers and have stronger incentives to support long-term investments whose benefits do not accrue entirely to the company that originates them. Indeed, Miguel Antón, Florian Ederer, Mireia Giné, and Martin Schmalz (2025), "Innovation: The Bright Side of Common Ownership?," published in Management Science, show that the effect of common ownership on innovation depends on the relationship between technological proximity and product-market competition: it can foster innovation when technological spillovers dominate, but reduce it when innovation is used primarily to take market share from a rival. Both mechanisms may coexist in aerospace and defense, so the net effect should be analyzed by technology and program rather than through a single aggregate industry measure.

The third implication concerns industrial consolidation. If the same investors are shareholders in both the acquirer and the target, or in several companies that could merge, their economic exposure may make them relatively indifferent as to which entity ultimately concentrates the assets, provided the combined value of the portfolio increases. In defense, however, consolidation decisions do not depend solely on capital markets: competition authorities, governments, foreign investment screening, and national security considerations also play a role. Therefore, the relevant long-term risk is not necessarily explicit coordination among shareholders, but rather a possible gradual homogenization of incentives, corporate governance criteria, and preferences for certain consolidation transactions across formally independent companies.

The fourth implication is geopolitical. Europe is devoting increasing public resources to strengthening its strategic autonomy and developing its own industrial capabilities. But the data show that industrial sovereignty and financial sovereignty are not exactly the same thing. A company may be based in Europe, produce for European armed forces, and have a national government as an anchor shareholder, while a substantial share of its free float is held by U.S. asset managers that also own stakes in its U.S. competitors. This does not mean that the company is controlled from the United States, but it does mean that a significant portion of its capital is integrated into a transatlantic financial network. In a context of geopolitical tension, decisions taken in the United States or Europe, such as new sanctions, investment restrictions, regulatory changes, or major portfolio reallocations by institutional investors, may simultaneously affect numerous Western companies because they share many of the same large shareholders and financial intermediaries.

There are also potential advantages. Large diversified owners can provide corporate governance discipline, long investment horizons, the capacity to finance highly capital-intensive programs, and a broader perspective on risks affecting several companies at once, such as supply-chain resilience. In addition, when one company's innovation generates technological benefits for others, a common owner may have fewer incentives to block those positive spillovers. For this reason, common ownership should not be treated as synonymous with a competition problem. It is an ownership structure whose effects may be positive or negative depending on the market and the mechanism under consideration.

The policy implication is that, if the trend documented by Miguel Antón, Florian Ederer, Mireia Giné, and Guillermo Ramirez-Chiang continues, in ten or twenty years it may be insufficient to measure concentration in defense solely through market shares, the number of competitors, or the nationality of corporate headquarters. The ownership network connecting these companies will also need to be considered. For competition authorities and defense ministries, it may be useful to incorporate common ownership as a monitoring variable in major mergers, procurement processes, and joint programs, carefully distinguishing between passive ownership, effective influence, and control. In Europe, moreover, a coherent strategic autonomy policy should consider not only where critical systems are designed and produced, but also who provides the capital, who exercises voting rights, and who performs shareholder oversight functions over the companies that produce them.

The phenomenon may be reinforced by the rapid growth of specialized defense investment vehicles. As of June 2026, Morningstar counted 19 ETFs available to European investors with thematic exposure to the sector, most of them launched in 2025. In the first five months of 2026 alone, they attracted €2.4 billion in net inflows. By construction, a defense ETF simultaneously buys stakes in many companies that compete with one another.

Defense ETFs illustrate the extent to which perceptions of the sector have changed: defense has gone from being an investment excluded by some ESG mandates to becoming a dedicated investment theme, precisely as governments are expanding their budgets.

The European debate on strategic autonomy tends to focus on where products are manufactured, who controls the technology, and which government can authorize an export. Share ownership adds a fourth dimension. Airbus may retain European public-sector stakes; Leonardo, Thales, or Saab may have governments, families, or industrial holding companies as anchor shareholders; and at the same time, a significant portion of their publicly traded equity may be managed by the same U.S. institutions that invest in their U.S. competitors.

The data point to three models. The United States combines stock-market leadership with ownership that is heavily institutional and domestic. China has much more domestic ownership, structured around strategic groups. Europe lies in between: it retains national control blocks in several companies, but its identified listed ownership is deeply connected to U.S. institutional capital.

The conclusion is not that BlackRock, Vanguard, or any other asset manager "controls" the global defense industry. The conclusion is that the nationality of a company and the nationality of the capital that finances it are two different realities. The network of common owners linking the leading Western defense companies is far denser than one would infer by looking only at the flag under which each company operates. If common ownership continues to increase, this ownership structure may become an increasingly relevant dimension for understanding competition, incentives to innovate, corporate consolidation, and ultimately the strategic autonomy of a particularly sensitive sector.

At a time when Europe is debating how much it should spend on defense, which capabilities it should develop within its borders, and which activities should be considered strategic, an additional question may need to be added. It is not enough to know where defense systems are manufactured or where companies are headquartered: the origin of their shareholders also matters. Above all, it matters to what extent savings generated in Europe but channeled through large U.S. asset managers may ultimately give those investors a degree of influence over the strategic decisions of Europe's leading defense companies. The point is not to argue that such ownership implies political control by the United States, but to ask whether genuinely European industrial autonomy can exist when a significant share of the capital of Europe's strategic companies is intermediated outside Europe.

One possible response would be to strengthen mechanisms that channel a larger share of European savings into the equity of European companies themselves. This is precisely one of the ideas underlying the Savings and Investments Union (SIU), promoted by the European Commission with the aim of linking Europe's high level of household savings more effectively to productive investment and the financing needs of EU companies. Along the same lines, Commission Recommendation (EU) 2025/2029 of 30 September 2025 promotes the broader availability of savings and investment accounts, with simplified procedures and favorable tax treatment, in order to encourage greater retail investor participation in capital markets. The Recommendation itself emphasizes that broadening the European investor base can provide new sources of financing for EU companies and help fund Europe's strategic priorities. The objective would not necessarily be to shield the ownership of European companies from foreign capital, but rather to reduce the paradox whereby Europe generates a large volume of savings that is, to a significant extent, channeled through large international asset managers and subsequently returns as capital to Europe's own strategic companies.

In this context, tax incentives, savings and investment accounts, and collective investment vehicles could be explored to make it easier for European households to invest in European companies operating in strategic sectors, including defense, space, and critical technologies. But it may be even more important to mobilize large European institutional investors, particularly pension funds and insurance companies, whose nature and investment horizon make them potential stable long-term shareholders. Greater participation by these investors in the equity of strategic European companies would not only broaden their sources of financing, but also help consolidate a shareholder base more closely tied to the European market itself.

The aim would not be to exclude international capital, which is an important source of financing and liquidity, but to ensure that Europe also has its own institutional capital base capable of supporting the growth of its strategic companies. From this perspective, European strategic autonomy depends not only on where factories, technology, or supply chains are located, but also on who channels savings, who exercises the voting rights attached to equity ownership, and who participates over the long term in the corporate decisions of companies deemed strategic.