Defense ETFs track the performance of equities of companies in the aerospace and defense sector. These companies include the ones involved in the manufacturing, distribution, and transportation of aircraft and their parts, radar equipment, military aircraft, and other weapons.
Although the spending on defense, aircraft, and military equipment has reduced in the past few years, defense ETFs continue to perform well, with high average returns and low expense ratios. Thus, defense ETFs provide investors with diversified exposure to a regulated sector, with low risk and high returns.
|ITA||iShares U.S. Aerospace & Defense ETF||$107.02||31.12%|
|XAR||SPDR S&P Aerospace & Defense ETF||$126.87||44.85%|
|PPA||Invesco Aerospace & Defense ETF||$74.55||34.88%|
|DFEN||Direxion Daily Aerospace & Defense Bull 3X Shares||$22.51||91.74%|
|FITE||SPDR S&P Kensho Future Security ETF||$51.78||39.87%|
|UFO||Procure Space ETF||$29.70||44.39%|
|ROKT||SPDR S&P Kensho Final Frontiers ETF||$41.17||33.06%|
|DFND||Reality Shares DIVCON Dividend Defender ETF||$39.45||13.04%|
|DUSL||Direxion Daily Industrials Bull 3X Shares Direxion Daily Industrials Bull 3||$44.67||177.11%|
|PSCI||Invesco S&P SmallCap Industrials ETF||$90.30||#N/A|
Factors to Consider Before Investing in Defense ETFs
The most significant factor to be considered before investing in defense ETFs is the overall geopolitical conditions across the world. The demand for defense equipment, weapons, and military aircraft gets largely affected by the geopolitical headwinds and government reactions to the tensions.
Investors should also pay due attention to the strength of companies that stock the defense ETFs track. The companies should be well-established and stable, with robust financial health. In addition to the company-specific parameters, the expense ratio and average returns of defense ETFs should also be considered before investing in them.
Investors can also supplement the fundamental analysis with technical analysis. Certain technical indicators serve to help predict the future performance of defense ETFs based on their historical performance.
Which Defense ETFs Should I Buy?
A few defense ETFs trade on the US stock exchange. They differ in their expense ratios, the index they track and replicate, assets under management, and average returns. We have compiled a list of the best defense stocks for you to choose from.
Defense ETFs are reliable avenues of investment that offer high returns on a long term basis. They track the performance of stocks of large companies with remarkable track records. Therefore, they serve to be excellent additions to investment portfolios looking for balance and diversification.
The #1 Investment of 2021
Our team has analyzed thousands of stocks in hundreds of sectors. Looking for stocks with massive growth potential? Check out the top stock pick for 2021.