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What are the best defense and aerospace ETFs?

AlphaOS investment intelligence · Research and education only — not investment advice · Updated Jul 5, 2026

The best defense and aerospace ETFs, based on assets under management, liquidity, and comprehensive sector exposure, include the iShares U.S. Aerospace & Defense ETF (ITA), the SPDR S&P Aerospace & Defense ETF (XAR), and the Invesco Aerospace & Defense ETF (PPA). These ETFs offer diversified exposure to companies involved in the manufacturing of aircraft, defense systems, and related technologies, making them suitable for investors seeking targeted exposure to the sector.

Key Takeaways

  • The iShares U.S. Aerospace & Defense ETF (ITA) is a prominent choice, holding significant assets under management and tracking the Dow Jones U.S. Select Aerospace & Defense Index.
  • The SPDR S&P Aerospace & Defense ETF (XAR) provides a more equal-weighted approach to its holdings, offering a different diversification strategy compared to market-cap weighted funds.
  • The Invesco Aerospace & Defense ETF (PPA) offers broad exposure to the sector, including companies involved in defense electronics, aerospace manufacturing, and security services.
  • These ETFs typically include major defense contractors and aerospace manufacturers such as Lockheed Martin, Boeing, Raytheon Technologies, and Northrop Grumman.
  • Investors should consider the expense ratios and liquidity of these ETFs, as well as their underlying index methodologies, to align with their investment objectives.
  • The defense and aerospace sector is influenced by geopolitical events, government defense spending, and technological advancements.
  • Performance of these ETFs can be cyclical, often correlating with global stability and national security priorities.

Evidence & Analysis

  • ITA has over $4 billion in assets under management, making it one of the largest and most liquid ETFs in the sector.
  • XAR's equal-weighting strategy means smaller companies within the index have the same impact as larger ones, potentially offering different risk/reward profiles.
  • PPA's portfolio includes companies across various sub-sectors, from defense electronics to space exploration, providing comprehensive coverage.
  • As of Q1 2024, top holdings in ITA consistently include companies like Raytheon Technologies, Lockheed Martin, and Boeing, reflecting the core of the industry.
  • The expense ratios for these ETFs typically range from 0.35% to 0.60%, which is competitive for specialized sector funds.

Key Companies

ITA

iShares U.S. Aerospace & Defense ETF

Largest ETF by AUM in the defense and aerospace sector, tracking the Dow Jones U.S. Select Aerospace & Defense Index.

XAR

SPDR S&P Aerospace & Defense ETF

Offers an equal-weighted approach to the S&P Aerospace & Defense Select Industry Index.

PPA

Invesco Aerospace & Defense ETF

Provides broad exposure to the aerospace and defense industry, tracking the SPADE Defense Index.

LMT

Lockheed Martin Corporation

Major holding in most defense and aerospace ETFs, a leading global security and aerospace company.

BA

The Boeing Company

Significant holding in aerospace ETFs, a global aerospace company manufacturing commercial jetliners and defense, space and security systems.

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Generated by AlphaOS from the Knowledge Graph, earnings intelligence, and industry analysis. Content is for research and education only — not investment advice.