As the world becomes more dangerous, nations don't just fight battles, they also seek to protect themselves. You can't fight a war without weapons, and you can't prevent a war without weapons either. Many of the weapons—including planes, drones, ships, rockets and artillery—are made in the U.S., home to 12 of the top 25 defense companies by revenues. (Second is China, with five.) Any reasonable investor would think that buying shares of weapon producers would lately have been a good bet. Not so.

Consider iShares U.S. Aerospace & Defense, the largest exchange-traded fund in the sector. Over the past five years, it has returned an annual average of a measly 7.6%—roughly half the gain of S&P 500 index. The stock of Lockheed Martin, the biggest defense contractor in the world, has returned 4% over the past five years. RTX, the former Raytheon, maker of the Patriot defensive missile system, gained just 3%.

The big contractors have become musclebound behemoths. I am less excited about large companies than about smaller firms.

Bureaucratic hurdles. One problem is that the big defense contractors have become muscle-bound behemoths. Heavily dependent on the government, they’re being stunted by the demands of bureaucracy. And they’re subject to the vagaries of geopolitics—and domestic politics. Lockheed stock, for example, has fallen by about one-fourth since mid October, in part because of fears that Donald Trump’s election will mean lower U.S. weapons investment and greater scrutiny by Elon Musk’s Department of Government Efficiency (DOGE). In jeopardy could be such huge Lockheed programs as the F-35 fighter jet.

I think these fears are overdone. The world will remain a scary place, and DOGE could actually help the defense sector by cutting red tape and rewarding performance. But I am less excited about large companies such as Lockheed and RTX than I am about smaller firms.