Capital Flows, Market Structure and the Durability of the Opportunity

ALTERNATIVE PERSPECTIVES | DEFENCE IN FOCUS • MAY 5, 2026

 

Key Takeaways

  • Capital is moving beyond traditional defence contractors into a broader ecosystem of technology, industrial and supply chain companies, expanding the range of investment opportunities.
  • A significant portion of defence spending remains unallocated, creating a multi-year pipeline of demand that is expected to be deployed across a wider range of participants.
  • The combination of sustained government spending, evolving procurement frameworks and increasing private capital participation is driving a more durable and investable defence innovation cycle.

Public market exposure to defence has historically been concentrated among a small number of large contractors, limiting how investors participate in the sector. While these companies remain central to defence capability delivery, they capture only a portion of the activity taking place across the broader ecosystem.

As defence spending expands and the sources of innovation shift, capital is being deployed across a wider range of companies, including technology firms, industrial suppliers and emerging businesses operating outside of traditional defence supply chains.

Understanding how that capital is flowing, and what makes the current cycle durable, is increasingly important for investors.

 

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AGF Capital Partners is AGF’s multi-boutique alternatives business with diverse capabilities across both private assets and alternative strategies. Clients can benefit from the specialized investment expertise of Affiliate Managers combined with the organizational support and breadth of resources of AGF Management Limited (AGF). With over 18 years average experience, AGF Capital Partners Affiliate Managers’ Kensington Capital Partners Limited, New Holland Capital, LLC and AGF SAF Private Credit manage approximately C$14 billion in alternative AUM and fee-earning assets on behalf of institutional and retail clients. Affiliate Manager AUM may not be consolidated into AGF Management Limited’s reported AUM. The term ‘Affiliate Manager’ refers to any partner regardless of relationship structures or revenue sharing agreements. The form of AGF’s structured partnership interests in Affiliate Managers differs from Affiliate Manager to Affiliate Manager. The structure of the relationship with a particular Affiliate Manager, or the revenue that AGF agrees to share in, may change. Affiliate Managers only provide investment advisory services or offer products in the jurisdiction where such firm, individuals and/or product is registered or authorized to provide such services. Products in Canada are distributed through registered dealers on a private placement basis, including by AGF Capital Partners’ affiliate, AGF Investments Inc.

The views expressed are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.

The commentaries contained herein are provided as a general source of information based on information available as of April 21, 2026. It is not intended to address the needs, circumstances, and objectives of any specific investor. The content of this commentary is not to be used or construed as investment advice, as an offer to buy or sell any securities, and is not intended to suggest taking or refraining from any course of action. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF and Affiliate Managers accept no responsibility for individual investment decisions arising from the use or reliance on the information contained herein.

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Published: April 29, 2026. RO: 20260428-5430286-17150519