Pete Hegseth’s broker sought to make large defence investment before attack on Iran: Report

A broker for Pete Hegseth, US defence secretary, sought to make a large investment in major defence companies in the weeks before the US-Israeli attack on Iran, according to a report. 

As per a report in Financial Times that cited three sources familiar with the matter, Hegseth’s broker at Morgan Stanley contacted BlackRock in February about a multimillion-dollar investment in the asset manager’s Defence Industrials Active ETF, shortly before the US launched military action against Tehran.

The inquiry on behalf of the high-profile potential client was flagged internally at BlackRock, according to the sources.

BlackRock’s $3.2 billion equity fund, ticker IDEF, aims to grow by investing in companies that may benefit from increased government spending on defence and security amid geopolitical tensions. Its largest holdings include defence conglomerates RTX, Lockheed Martin and Northrop Grumman, all major contractors for the US Department of Defence, as well as data integration firm Palantir.

Following the report, Pentagon spokesperson Sean Parnell stated on social media platform X that the allegation was false and fabricated, asserting that neither Secretary Hegseth nor his representatives approached BlackRock about the investment.

The investment did not proceed as the fund, launched in May last year, was not yet available for Morgan Stanley clients. Although ETFs are traded like stocks, most brokerage platforms only offer a subset of the more than 14,000 ETFs available globally.

It is unknown whether Hegseth’s broker sought alternative defence-focused funds. The Nasdaq-listed IDEF fund rose 28 per cent over the past year but fell nearly 13 per cent in the past month since the Middle East conflict began.