Using ETFs to Invest in the Aerospace and Defense Industry

Aerospace airplane on a runway

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If you believe there are investment opportunities in the aerospace and defense sectors, instead of looking at individual stocks, consider investing in defense and aerospace sector ETFs. Such vehicles offer a widely diverse exposure to these companies, where none of the heavy research burdens falls on your shoulders. What's more: ETFs let you cut down on pesky brokerage fees, ultimately saving you money by reducing your commission bill. Finally, many ETFs come with tax benefits.

So if you are ready to take the aerospace and defense sectors ETF plunge, here are some vehicles worth considering:

ITA — iShares Dow Jones U.S. Aerospace & Defense ETF

This ETF tracks the Dow Jones U.S. Select Aerospace & Defense Index. Its 35 holdings include stocks like Boeing (BA) and Lockheed Martin (LMT). Its business involvement metrics is 35.50% of controversial weapons and 24.32% of nuclear weapons. For more information, you can check out the ITA fact sheet on the iShares website.

PPA — Invesco Aerospace & Defense ETF

This ETF tracks the SPADE Defense Index and of its 51 holdings, some of the top securities are Honeywell International (HON), Lockheed Martin (LMT) and Raytheon Corporation (RTN). The sector breakdown in this fund is 88.85% Industrials, 5.93% IT Companies, and 4.15% Materials. For more information, you can check out the PPA fact sheet on the Invesco website.

XAR — SPDR S&P Aerospace & Defense ETF

This SPDR ETF tracks the S&P Aerospace & Defense Select Industry Index (SPSIAD) and of its 37 holdings, some of the top stocks are Northrop Grumman, Textron Inc., Lockheed Martin and L3Harris Technologies Inc. The sector breakdown for this fund is 100% aerospace and defense. For more information, you can check out the XAR fact sheet on the SSGA website.

DFEN — Direxion Daily Aerospace & Defense Bull 3X Shares

As of May 2021, there were just five ETF targeting the aerospace and defense sector, which should make it simple for investors to thoroughly investigate each one, to determine which ones make the most sense. Naturally, as with any investments, these ETF offerings contain risk, with no guaranteed returns on investment.

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  1. iShares by BlackRock. "iShares U.S. Aerospace & Defense ETF."

  2. Invesco. "Invesco Aerospace & Defense ETF."

  3. State Street Global Advisors. "SPDR® S&P® Aerospace & Defense ETF."

  4. ETF Database. "Aerospace & Defense ETF List."

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