Germany's Kenfo Sovereign Fund Lifts Defense Investment Ban

Kenfo, Germany's sovereign wealth fund, is pivoting its investment strategy to allow holdings in the defense sector, ending a period of strict exclusions for weapons manufacturers. This policy reversal marks a significant change in how the state-backed investor manages its portfolio in light of current global security concerns. Chief Executive Officer Anja Miku confirmed the decision, stating that the fund is responding to an increasingly tense geopolitical reality. The shift suggests a pragmatic realignment of investment mandates to match the evolving security environment in Europe and beyond. Under the previous regulatory framework, Kenfo was prohibited from holding liquid assets in any company that generated more than 5% of its total revenue from defense-related activities. This strict threshold effectively locked the fund out of the majority of the global defense industry. With these restrictions now abandoned, the fund is free to acquire stocks and bonds issued by defense firms. This opens the door for substantial institutional capital to flow into the military-industrial complex, potentially providing a liquidity boost to contractors and signaling a broader normalization of defense investment within the German financial ecosystem.