A broker representing US Defence Secretary Pete Hegseth explored the possibility of making a significant investment in major defence companies in the weeks leading up to the US-Israeli military action against Iran, the Financial Times reported, citing people familiar with the matter.
In February, the broker, associated with Morgan Stanley, reportedly approached BlackRock regarding a potential multimillion-dollar investment in its Defense Industrials Active ETF. The inquiry, made on behalf of a high-profile client, was flagged internally at BlackRock, according to the report.
The fund, valued at $3.2 billion and trading under the ticker IDEF, focuses on companies expected to benefit from rising government spending on defence and security amid global geopolitical tensions. Its top holdings include RTX Corporation, Lockheed Martin, Northrop Grumman and Palantir Technologies.
Pentagon Denies Allegations
Following publication of the report, Pentagon spokesperson Sean Parnell rejected the claims as “false and fabricated”.
“This allegation is entirely false and fabricated. Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment,” he wrote on X.
This allegation is entirely false and fabricated. Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment. This is yet another baseless, dishonest smear designed to mislead the public.
We demand an immediate retraction.… https://t.co/Su8hGlBOhL
— Sean Parnell (@SeanParnellASW) March 30, 2026
Both BlackRock and Morgan Stanley declined to comment, the Financial Times added.
Investment Did Not Materialise
According to FT Times, the proposed investment did not go ahead as the ETF, which was launched in May last year, was not yet available to Morgan Stanley clients. While exchange-traded funds (ETFs) are generally easy to trade, not all are immediately accessible across brokerage platforms due to the large number available.
It remains unclear whether an alternative defence-focused investment was pursued. ETFs are widely favoured for their lower fees, tax efficiency and trading flexibility compared to mutual funds.
The IDEF fund has gained 28 per cent over the past year but has declined nearly 13 per cent in the past month amid volatility linked to the Middle East conflict.
Timing Likely to Draw Scrutiny
Although the investment did not proceed, the reported attempt is likely to attract scrutiny given its timing, when the Defence Department was preparing for a large-scale military campaign.
The development comes as analysts on Wall Street increasingly examine trading activity ahead of major policy decisions by the administration of Donald Trump.
Hegseth has been a key figure in shaping US policy towards Iran and one of the administration’s most vocal advocates for military action.
Hegseth’s Past Earnings And Financial Disclosures
Before entering government, Hegseth worked at Fox News, earning $4.6 million in salary between 2022 and 2024, according to disclosures. He also received nearly $500,000 in book advances, royalties ranging from $100,001 to $1 million per book, and close to $900,000 in speaking fees.
His most recent financial disclosure, released in June 2025, showed that he sold shares in 29 companies, with individual transactions ranging between $1,001 and $50,000, the Financial Times reported.
