A broker linked to US Defense Secretary Pete Hegseth is reported to have tried to shift money into defense-related investments shortly before the US-Israeli military campaign against Iran. The move sparked outrage because the outreach came at a time when Hegseth was seen within President Donald Trump’s administration as a key advocate of military action against Iran. The planned transaction ultimately did not take place.
In February, a Morgan Stanley broker reportedly contacted BlackRock to explore a large investment in a defense-focused exchange-traded fund (ETF). People familiar with the matter said the inquiry was made on Hegseth’s behalf and presented him as a prominent prospective investor. The proposed allocation targeted BlackRock’s Defense Industrials Active ETF, designed to benefit from rising defense spending and global security tensions; the approach was flagged internally at BlackRock because of the prospective client’s profile. It remained unclear how much discretion the broker had in initiating the discussions and whether Hegseth knew about the outreach in advance.
The Pentagon rejected the account. Chief spokesperson Sean Parnell said on X that the allegation was “entirely false and fabricated,” adding that neither Secretary Hegseth nor any representatives had approached BlackRock about such an investment. BlackRock declined to comment publicly after the report, and Morgan Stanley did not immediately respond to requests for clarification.
The investment in question centered on BlackRock’s Defense Industrials Active ETF, listed on the Nasdaq under the ticker IDEF, which manages about $3.2 billion in assets. BlackRock says the fund seeks growth opportunities by investing in companies that may benefit from higher government spending on defense and security amid geopolitical fragmentation and economic competition. Its holdings include major US defense contractors such as RTX, Lockheed Martin, and Northrop Grumman, as well as data integration company Palantir; many of these firms count the US Department of Defense as their principal customer.
According to those involved, the investment failed for technical or distribution reasons: the ETF, launched in May of the previous year, was not yet available for clients to trade on Morgan Stanley’s platform at the time of the inquiry. With the global ETF universe now exceeding 14,000 products, brokerage platforms often offer only a curated selection. It was not known whether the broker pursued alternative defense-related investment vehicles after the initial attempt fell through.
IDEF’s recent market performance has been mixed. Over one year, the fund gained about 28 percent, but it fell by nearly 13 percent over the past month even as the war in West Asia shaped market conditions.
The timing drew particular scrutiny because the inquiry came in the weeks before military action against Iran, a campaign in which Hegseth played a prominent role. Trump has reportedly identified him as the first member of his national security team to strongly advocate military intervention, and Hegseth has been among the administration’s most vocal proponents of demonstrating US military strength in the region.
Market observers linked the controversy to a broader review of unusual positioning. Analysts have been examining trading patterns across stocks, ETFs, and prediction markets that appeared to anticipate major decisions by the Trump administration, with several cases of well-timed positions identified ahead of significant policy announcements.
Hegseth’s financial disclosures provide additional context for his investment profile. During his time at Fox News from 2022 to 2024, he earned $4.6 million in salary, received nearly $500,000 in book advances, generated between $100,001 and $1 million in royalties, and collected close to $900,000 in speaking fees. A disclosure released in June 2025 showed he had sold shares in 29 companies, with individual transactions ranging from $1,001 to $50,000.
Source: Firstpost