Investing in defense ETFs offers a strategic way to gain exposure to the defense sector without directly purchasing individual stocks.
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This page will discuss:
- Defense ETFs
- Best defense ETFs
- Defense stocks ETF
Defense ETFs
Exchange-traded funds (ETFs) bundle together dozens or even hundreds of stocks, bonds, or other securities to offer investors broad exposure to entire sectors or industries.
These ETFs specifically target the defense sector, encompassing companies involved in military and defense activities, including aerospace, naval, land-based defense, and cybersecurity.
Investors choose defense ETFs for their unique combination of industry-wide exposure and the convenience of trading like a single stock.
Defense Sector ETF
The defense sector ETF comprises several key components, including aerospace, naval, land-based defense, and cybersecurity.
Leading companies within this sector often have long-standing contracts with governments worldwide, providing a range of products and services from aircraft and naval ships to tanks, missiles, and cyber defense solutions.
Defense ETFs aggregate stocks from these companies, offering investors a slice of the entire defense industry.
Best Defense ETFs
Here are some of the best defense ETFs to consider in 2024:
iShares U.S. Aerospace and Defense ETF (ITA)
- Largest defense ETF with exposure to domestic U.S. aerospace and defense companies.
- Expense Ratio: 0.40%.
- Top Holdings: RTX, Boeing, Lockheed Martin, Northrop Grumman, General Dynamics.
- Assets Under Management: $5.05 billion.
Invesco Aerospace and Defense ETF (PPA)
- Focuses on companies involved in the U.S. defense, homeland security, and aerospace sectors.
- Expense Ratio: 0.58%.
- Top Holdings: Northrop Grumman, RTX, Lockheed Martin, Boeing, General Electric.
- Assets Under Management: $2.074 billion.
SPDR S&P Aerospace and Defense ETF (XAR)
- Tracks the S&P Aerospace & Defense Select Industry Index.
- Expense Ratio: 0.35%.
- Top Holdings: Virgin Galactic Holdings Inc., BWX Technologies Inc., Axon Enterprise Inc.
- Assets Under Management: $1.5 billion.
Defense Stocks ETF
Investors buy shares of defense ETFs, gaining exposure to a broad array of defense stocks, which mitigates the risk associated with the performance of any single company.
Diversification stands as one of the primary benefits of investing in defense ETFs. By spreading investments across multiple defense companies, ETFs reduce the risk that comes with the volatility of individual stocks.
Vanguard Defense ETF
Vanguard, known for its low-cost investment options, offers ETFs that provide exposure to the defense sector.
These ETFs include companies that are directly and indirectly involved in the development, manufacturing, and sales of defense and military products and services.Vanguard’s approach typically emphasizes diversification and long-term growth, which may appeal to investors looking for stable returns rather than speculative gains.
Military Stock
Defense ETFs typically include stocks from leading companies in the sector, known for their significant contributions to military, aerospace, and defense technologies.
Companies such as Lockheed Martin, Northrop Grumman, and Raytheon Technologies are often key components of these ETFs, reflecting their pivotal roles in defense contracting and innovation.
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