The room was full, the discussions intense, and the level of engagement from private bankers and wealth managers resembled a barometer of the geopolitical and financial environment that has taken shape since Russia’s invasion of Ukraine. 

The sharp rallies in companies such as Rheinmetall, Palantir, and Raytheon may be the market expression of these changes, but they represent only the surface of a deep structural realignment. As fresh peace talks take shape in Geneva, many shifts triggered by the Ukraine war may prove permanent.

Client-Inspired Strategy

Decalia partner Xavier Guillon set the tone from the outset. The intention was not to promote a product, he said, but «to make you think about the future». 

The original impetus for launching a dedicated defense strategy had come from clients themselves, who felt «the world was changing». 

Long-Term Shift

Before discussing portfolios, he continued, one had to understand whether defense was «just a short-term spike — or something that will shape the next ten years and beyond».

That question offered the perfect transition to the keynote speaker, Mark Galeotti, the British professor and expert on Russia and global security. 

«Downbeat Message»

He began without theatrics, but with a line that set the room on edge: «I’m here with a very downbeat message — the world is getting more dangerous again.» His point was empirical, not rhetorical. There were fifty-nine state-based conflicts in 2023, sixty-one in 2024, and 2025 is already on track to exceed that figure. «We are returning to a world in which war is not an anomaly but an increasingly common feature.»

Galeotti described the complacency that had settled over Europe after the Cold War — the illusion of a stabilizing American «hyperpower», the assumption of distant, limited «wars of choice», the belief that security threats had receded enough for Europe to concentrate on prosperity alone. 

Insights on Putin

This worldview, he said, has been overtaken by reality. Russia, in particular, represents a structural challenge to Europe’s security architecture. He cited Vladimir Putin’s own words — first from 1999, then from 2023 — to illustrate that the Kremlin sees the West as existentially hostile: «Putin has no qualms in using the word ‹war›», Galeotti said, «not about Ukraine, but about the West.»

The more unsettling message, though, concerned the period after the current war. «It can’t continue at this tempo for more than a couple of years», Galeotti conceded. «But that’s not the same as peace.» Russia is preparing not only to replenish its forces but to expand them. Military spending already consumes roughly forty percent of the federal budget. 

An Unresolved Question

Even a post-Putin Russia, he argued, would not necessarily be more conciliatory: «We might get a pragmatic kleptocrat — or we might get a younger, smarter Putin.» The deepest question — whether Russia can ever be integrated into a broader European framework — has «for centuries remained unresolved, and remains unresolved now».

Galeotti then widened the aperture: China’s rise as a security actor, the export of increasingly sophisticated Chinese weaponry, the emergence of Chinese mercenaries in Africa, the geopolitical impact of climate change from the Sahel to Central Asia, and the accelerating technological curve in warfare. Drones, artificial intelligence, electromagnetic-spectrum warfare and the «recon-strike complex» were reshaping the offense–defense balance in real time. «Technology has always been at the leading edge of warfighting», he said, «but we are now at an inflection point.»

The Investor's Lense

When Galeotti finished, Roberto Magnatanini, Lead Portfolio Manager of the Decalia AEGIS Fund, stepped forward. His analysis mirrored Galeotti’s geopolitical narrative, but filtered through the lens of an investor. 

«What many people still miss», he said, «is how long-term these cycles are.» Ammunition production can be expanded within five to ten years. Tanks require twenty to thirty. Fighter jets thirty to fifty. Submarines fifty to eighty. «It’s sad», he added, «but it’s a fact: this cycle is here to last.»

Military Erosion in Europe

Magnatantini underscored the staggering extent of Europe’s military erosion. Germany today possesses 77 to 85 percent fewer tanks than during the Cold War, «and maintenance is not what you would expect in a tank». Large parts of Europe’s armed forces, he said, had become little more than «mocks of an army» — structures without equipment, readiness, or credible deterrent power. 

Countries that have a strong understanding of security risks, such as South Korea, Israel, or Norway, allocate a larger share of their defense spending to equipment. In contrast, countries that are less well prepared tend to devote most of their budgets to personnel, a divergence that speaks volumes.

Drone-Saturated Battlespace

His analysis of technological obsolescence was no less stark. Programs like the U.S. Future Attack Reconnaissance Aircraft simply do not survive in a drone-saturated battlespace. The same is true of certain light armored vehicles, and even of the venerable A-10 Warthog. «Air defenses make them extremely vulnerable and their role can probably be better served — at lower cost and lower risk — using drones», he said.

On valuations, Magnatantini pushed back against a common concern. «No, Rheinmetall is not a bubble», he said. After decades as an ex-growth industrial name, the company is now posting sustained revenue expansion of 30 to 35 percent and ballooning margins. «Earnings are here to stay.» 

Compelling Opportunities

But he emphasised that some of the most compelling opportunities lie in smaller, lesser-known firms — Exail, Kitron, Norbit — that are scaling rapidly within specialized niches.

The Q&A session brought to the surface a theme that has quietly shaped defense investing for years: ESG. What used to be «the elephant in the room», Magnatantini noted, had shifted fundamentally since 2022. «Without security, you have nothing.» Even Norway’s sovereign wealth fund, long seen as a moral bellwether, is re-examining its exclusions. 

«Going back to 2019 is not an option.»

Galeotti reinforced the argument: security is the foundation of any functioning society; to exclude defense on ESG grounds is to confuse ends and means.

Another question from the audience cut to the heart of investor uncertainty: What happens if Russia and Ukraine reach a peace agreement? Galeotti’s response was succinct: «A ceasefire is possible. Peace is not.» Magnatantini agreed. Europe would still need to rebuild its defenses from the ground up. «Going back to 2019 is not an option.»

A Mirror of the Real World

By the end of the afternoon, the event itself had proven its thesis. Financial markets are a mirror of the real world — and the real world has become harder, more dangerous, and more strategic.

To fill a room in Zurich for a defense investment conference would have been difficult to imagine a few years ago. Today it feels almost self-evident. The paradigm shift is here.