6 Best Defense ETFs to Watch
The global defense industry is experiencing steady growth due to increasing national security concerns, technological advancements, and higher defense budgets. As a result, investing in defense ETFs has become an attractive opportunity for investors seeking long-term returns. In this article, we will take a look at the six best defense ETFs to watch.
1. Invesco Aerospace & Defense ETF (PPA)
Invesco Aerospace & Defense ETF (PPA) consists of U.S.-listed companies specializing in aerospace and defense products and services. PPA seeks to track the SPADE Defense Index, which includes companies involved in developing cutting-edge technologies such as drones, cybersecurity, and missile defense systems. Some of its top holdings include Boeing, Lockheed Martin, and Raytheon Technologies.
2. iShares U.S. Aerospace & Defense ETF (ITA)
The iShares U.S. Aerospace & Defense ETF (ITA) aims to track the Dow Jones U.S. Select Aerospace & Defense Index, providing exposure to U.S-based companies involved in aircraft production, military equipment manufacturing, and defense electronic systems. Top holdings in ITA consist of large-cap stocks like Lockheed Martin, Boeing, and Northrop Grumman Corporation.
3. SPDR S&P Aerospace & Defense ETF (XAR)
The SPDR S&P Aerospace & Defense ETF (XAR) is designed to follow the S&P Aerospace & Defense Select Industry Index. It offers a more equally weighted portfolio across small, mid and large-cap stocks from aerospace and defense sectors. Notable holdings include Aerojet Rocketdyne Holdings, L3Harris Technologies, and Teledyne Technologies.
4. Direxion Daily Aerospace & Defense Bull 3x Shares (DFEN)
For aggressive investors seeking quick returns with higher risk tolerance, the Direxion Daily Aerospace & Defense Bull 3x Shares (DFEN) offers triple leverage on the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index. This ETF is suited for short-term trading opportunities rather than long-term holding, as it resets daily and carries a higher expense ratio.
5. ARK Space Exploration & Innovation ETF (ARKX)
The ARK Space Exploration & Innovation ETF (ARKX) is a unique choice for those interested in investing in companies involved in space exploration and technology. The fund targets holdings focused on orbital and suborbital aerospace, enabling technologies, and the beneficiaries of aerospace activities. Top holdings include Trimble Inc., Kratos Defense & Security Solutions, and L3Harris Technologies.
6. VanEck Vectors Space ETF (SPACE)
Offering a broader exposure to space industry-focused companies, the VanEck SPACE ETF seeks to track the performance of the Yewno Space Index, which contain firms related to satellite communications, rocket manufacturing, spacecraft components, and space exploration. Notable holdings consist of SpaceX, Iridium Communications, and Maxar Technologies.
In conclusion, these six defense ETFs offer investors various degrees of risk and reward potential with exposure to both established giants and innovative newcomers in the aerospace and defense industries. As global tensions and technological advancements drive increasing defense spending, these ETFs provide a sound investment vehicle for long-term growth potential.