What are aerospace & defense ETFs?
Aerospace and defense companies build fighter jets, missiles, jet engines, airliners and the parts and electronics inside them. Their main customers are governments and airlines. The 12 US-listed ETFs in this guide own these businesses, and most share a core of large US contractors. RTX is held by 9 of the 12 funds. Lockheed Martin and L3Harris are each held by 8, and Boeing, General Dynamics, Northrop Grumman and Howmet Aerospace by 7. General Electric, the jet-engine maker, is held by 6.
The funds differ more than their names suggest. Most track an index. ITA, from iShares, is the most top-heavy: GE alone was 22.61% of the fund, and its top 10 holdings made up 75.15%. Invesco's PPA tracks the SPADE Defense Index across 61 holdings. SPDR's XAR spreads its money more evenly, with no holding above 3.4%. Global X's SHLD tracks a defense tech index, and Palantir is its largest holding. EUAD holds European companies such as Airbus, KDEF holds South Korean ones, and NATO holds companies from NATO member countries. MISL stands out for holding SpaceX, at 7.81%. GCAD and WAR state goals rather than an index to follow. DFEN is leveraged: it aims for three times its index's daily move.
Costs vary. The median expense ratio is 0.50%. The expense ratio is the yearly fee taken out of the fund's assets. XAR and NATO charge 0.35% and ITA charges 0.37%. DFEN charges the most, at 0.96%. Gabelli's GCAD lists 0%, an unusual figure worth checking in its prospectus.
The money is concentrated too. The group held about $39.2 billion as of October 29, 2026, and 96.2% of it sat in the five largest funds: ITA, PPA, SHLD, XAR and EUAD. ITA alone held about $14.4 billion.
Aerospace & defense ETF holdings: the stocks most funds own
The stocks that show up most often among the largest positions of the 12 biggest aerospace & defense ETFs with holdings reports, from their latest N-PORT filings.
| Stock | Funds holding it | Typical weight |
|---|---|---|
| Rtx Corporation | 9 of 12 | 8.3% |
| Lockheed Martin Corporation | 8 of 12 | 5.17% |
| L3harris Technologies, Inc. | 8 of 12 | 3.02% |
| The Boeing Company | 7 of 12 | 6.87% |
| General Dynamics Corporation | 7 of 12 | 4.33% |
| Northrop Grumman Corporation | 7 of 12 | 3.92% |
| Howmet Aerospace Inc. | 7 of 12 | 3.91% |
| General Electric Company | 6 of 12 | 8.92% |
| Transdigm Group Incorporated | 6 of 12 | 3.09% |
| Axon Enterprise, Inc. | 5 of 12 | 3.2% |
| Curtiss-wright Corporation | 4 of 12 | 1.96% |
| Palantir Technologies Inc. | 3 of 12 | 6.7% |
Typical weight is the median share of each fund’s assets in the stock, among the funds that hold it in their 25 largest positions.
The largest aerospace & defense ETFs, side by side
Swipe the table to see all 5 funds.
| ITA | PPA | SHLD | XAR | EUAD | |
|---|---|---|---|---|---|
| Net assets | $14.44B | $8.26B | $7.24B | $6.47B | $1.24B |
| Expense ratio | 0.37% | 0.58% | 0.5% | 0.35% | 0.5% |
| Holdings | 49 | 61 | 57 | 48 | 31 |
| In the 10 largest | 75.15% | 54.73% | 64.75% | 30.39% | 33.9% |
| Biggest holding | General Electric Company (22.61%) | RTX Corp. (8.3%) | Palantir Technologies Inc. (10.8%) | VSE Corp (3.4%) | Airbus SE (5.82%) |
| Yield | 0.09% | 0.43% | 0.68% | 0.19% | 0.43% |
| 1-year return | -0.3% | -1.3% | -6.9% | -10.5% | -11.2% |
| 3 years, a year | +24.8% | +26.1% | +36.9% | +26.6% | — |
| 5 years, a year | +16.4% | +17.3% | — | +14.0% | — |
| Worst drop, past year | -20.0% | -17.3% | -25.4% | -26.6% | -22.0% |
| Launched | 2006 | 2005 | 2023 | 2011 | 2024 |
The largest ordinary funds by net assets (leveraged and inverse funds are listed further down). Holdings from each fund’s latest N-PORT report; returns include reinvested distributions, as of Nov 2, 2026.
Head to head
ITA vs PPA
The two largest funds have 35 holdings in common, and 65.5% of their assets overlap. ITA is more top-heavy: GE was 22.61% of the fund and its top 10 made up 75.15%. PPA tracks the SPADE Defense Index and spreads its 61 holdings more widely. Its largest, RTX, was 8.3%, and its top 10 made up 54.73%. ITA costs 0.37% a year and PPA 0.58%. In the year to October 29, 2026, ITA lost 1.2% and PPA 1.3%. Their worst drops were 20% and 17.3%. ITA may suit investors comfortable with a large GE stake, and PPA those wanting a wider spread.
ITA vs XAR
ITA and XAR hold 46 of the same stocks, but only 49.9% of their assets overlap because they weight those stocks very differently. ITA is top-heavy, with GE at 22.61% and 75.15% in its top 10. XAR's largest holding, VSE Corp, was 3.4%, and its top 10 made up 30.39%, so no single company dominates. XAR costs 0.35% a year and ITA 0.37%. In the year to October 29, 2026, XAR lost 10.5% and ITA 1.2%. Their worst drops were 26.6% and 20%. XAR may suit investors who want less reliance on a few giants, and ITA those comfortable with a few dominant names.
ITA vs EUAD
ITA and EUAD have no holdings in common. ITA owns US companies, led by GE, RTX and Boeing. EUAD launched in October 2024 and tracks the STOXX Europe Total Market Aerospace & Defense Index. Its largest holdings are Airbus, MTU Aero Engines, BAE Systems and Rolls-Royce. EUAD is more spread out, with 33.9% in its top 10 against ITA's 75.15%, but it costs more: 0.50% versus 0.37%. In the year to October 29, 2026, EUAD lost 11.2% and ITA 1.2%. Their worst drops were 22% and 20%. EUAD may suit investors who want European companies, and ITA those who want US ones.
How much do the largest aerospace & defense ETFs overlap?
Owning two funds that hold the same stocks adds little diversification. Overlap here is the share of assets two funds have in common: for each stock both own, the smaller of its two weights, added up.
| Funds | Assets in common | Shared holdings | |
|---|---|---|---|
| ITA and PPA | 65.5% | 35 | |
| ITA and XAR | 49.9% | 46 | |
| PPA and XAR | 47.6% | 35 | |
| PPA and SHLD | 40.3% | 21 | |
| ITA and SHLD | 30.2% | 15 | |
| SHLD and XAR | 22.1% | 15 | |
| ITA and EUAD | 0% | 0 | |
| PPA and EUAD | 0% | 0 | |
| SHLD and EUAD | 0% | 0 | |
| XAR and EUAD | 0% | 0 |
From each fund’s full holdings in its latest N-PORT report.
How have aerospace & defense ETFs performed?
The five largest ordinary funds: growth from the start of the range, distributions reinvested. The dashed gray line is the S&P 500 (SPY).
Best-performing aerospace & defense ETFs over the past year
| # | Fund | Net assets | Cost | 1 mo | YTD | 1 yr | 3 yr |
|---|---|---|---|---|---|---|---|
| 1 | WAR U.S. Global Technology and Aerospace & Defense ETF | $41.3M | 0.6% | -9.0% | +26.0% | +24.6% | — |
| 2 | GCAD Gabelli Commercial Aerospace and Defense ETF | $43.7M | 0% | -2.6% | +4.1% | +6.2% | +29.7% |
| 3 | ITA iShares U.S. Aerospace & Defense ETF | $14.44B | 0.37% | +3.3% | +0.2% | -0.3% | +24.8% |
| 4 | PPA Invesco Aerospace & Defense ETF | $8.26B | 0.58% | -1.5% | +0.6% | -1.3% | +26.1% |
| 5 | MISL First Trust Indxx Aerospace & Defense ETF | $801.9M | 0.6% | -2.8% | -3.1% | -5.2% | +23.9% |
| 6 | SHLD Global X Defense Tech ETF | $7.24B | 0.5% | +2.9% | -2.1% | -6.9% | +36.9% |
| 7 | NATO Themes Transatlantic Defense ETF | $100.7M | 0.35% | -4.4% | -5.4% | -7.3% | — |
| 8 | XAR SPDR S&P Aerospace & Defense ETF | $6.47B | 0.35% | -6.3% | -6.9% | -10.5% | +26.6% |
| 9 | EUAD Select STOXX Europe Aerospace & Defense ETF | $1.24B | 0.5% | -8.1% | -6.7% | -11.2% | — |
| 10 | KDEF PLUS Korea Defense Industry Index ETF | $112.9M | 0.65% | -19.0% | -22.4% | -26.8% | — |
Funds with at least $25 million in net assets; leveraged and inverse funds left out. Past returns don’t predict future returns.
How aerospace & defense ETFs did in past market crashes
| Fund | 2008 crash | 2020 crash | 2022 drop |
|---|---|---|---|
| ITA | -60.0% | -50.2% | -8.8% |
| PPA | -57.4% | -43.5% | -7.4% |
| SHLD | not yet launched | not yet launched | not yet launched |
| XAR | not yet launched | not yet launched | -19.5% |
| EUAD | not yet launched | not yet launched | not yet launched |
| S&P 500 (SPY) | -55.2% | -33.7% | -24.5% |
Total return from the stock market’s peak to its low in each fall, distributions reinvested.
What drives aerospace & defense ETFs?
These funds hold two kinds of business. Defense contractors such as Lockheed Martin, Northrop Grumman and General Dynamics count governments as their main customers. Their revenue follows military budgets, long-term contracts and political decisions more than the wider economy. Commercial aerospace companies such as Boeing, GE and Howmet Aerospace depend on airlines ordering new planes and keeping their fleets flying. That ties them to air travel, fuel prices and borrowing costs. In both groups, production problems, parts shortages and fixed-price contracts that run over budget can squeeze profits.
This mix showed up in past downturns. In the 2008 financial crisis, ITA fell 60% and PPA 57.4%, slightly more than the S&P 500's 55.2% decline. In the 2020 Covid crash, when air travel collapsed, ITA lost 50.2% and PPA 43.5%, against 33.7% for the S&P 500. The 2022 bear market, driven largely by rising interest rates, was gentler on them. ITA fell 8.8%, PPA 7.4% and XAR 19.5%, while the S&P 500 fell 24.5%. SHLD and EUAD launched too late to have records for these periods.
Aerospace & defense ETFs with the lowest expense ratios
| # | Fund | Expense ratio | On $10,000 | Net assets |
|---|---|---|---|---|
| 1 | XAR SPDR S&P Aerospace & Defense ETF | 0.35% | $35 a year | $6.47B |
| 2 | NATO Themes Transatlantic Defense ETF | 0.35% | $35 a year | $100.7M |
| 3 | ITA iShares U.S. Aerospace & Defense ETF | 0.37% | $37 a year | $14.44B |
| 4 | FOWF Pacer Solactive Whitney Future of Warfare ETF | 0.49% | $49 a year | $15.8M |
| 5 | SHLD Global X Defense Tech ETF | 0.5% | $50 a year | $7.24B |
Ordinary funds with at least $10 million in net assets. The median ordinary aerospace & defense ETF charges 0.5% a year; leveraged and inverse funds usually charge more.
Do aerospace & defense ETFs pay dividends?
11 of the 11 ordinary aerospace & defense ETFs with a page here paid distributions over the last 12 months, with a median yield of 0.43%.
| Highest yields | Yield | Net assets |
|---|---|---|
| WAR U.S. Global Technology and Aerospace & Defens… | 10.15% | $41.3M |
| KDEF PLUS Korea Defense Industry Index ETF | 8.86% | $112.9M |
| GCAD Gabelli Commercial Aerospace and Defense ETF | 1.99% | $43.7M |
| SHLD Global X Defense Tech ETF | 0.68% | $7.24B |
| NATO Themes Transatlantic Defense ETF | 0.47% | $100.7M |
Distributions over the last 12 months divided by the price; funds with at least $25 million in net assets.
How to choose a aerospace & defense ETF
- What each fund charges each year. XAR and NATO charge 0.35% a year and ITA 0.37%. PPA charges 0.58%, MISL and WAR 0.60%, KDEF 0.65% and the leveraged DFEN 0.96%. Small yearly gaps add up over decades of holding.
- How top-heavy each fund is. ITA put 75.15% in its top 10 holdings and 22.61% in GE alone. PPA's top 10 made up 54.73%. XAR spread its money widely, with 30.39% in its top 10 and no holding above 3.4%.
- How each fund picks its stocks. Most track indexes. PPA follows the SPADE Defense Index, and SHLD's defense tech index puts Palantir first, at 10.8%. GCAD and WAR name goals instead of an index. WAR holds tech stocks like Micron and Astera Labs.
- US-only or international holdings. ITA, XAR and MISL track US indexes. EUAD holds European firms such as Airbus and BAE Systems. KDEF holds South Korean ones, led by Hanwha Aerospace, and NATO spans both sides of the Atlantic. EUAD and ITA share no holdings.
- Fund size and length of record. As of October 29, 2026, ITA held about $14.4 billion. It launched in 2006, and PPA dates to 2005. FOWF held about $15.8 million. FOWF, WAR, KDEF, NATO and EUAD all launched in October 2024 or later, so their records are short.
- DFEN is a 3x daily trading tool. DFEN aims for three times its index's daily return and resets every day. Over longer periods, its results can differ sharply from three times the index. It lost 34.8% in the year to October 29, 2026, and charges 0.96%.
What are the risks of aerospace & defense ETFs?
- A few stocks carry heavy weight. ITA's top 10 holdings were 75.15% of the fund, with GE alone at 22.61%. KDEF put 23.38% in Hanwha Aerospace and SHLD 10.8% in Palantir. Trouble at one company can move these funds sharply.
- Air travel shocks hit commercial aerospace. Funds holding Boeing, GE and parts makers depend on airlines. In the 2020 Covid crash, ITA fell 50.2% and PPA 43.5%, while the S&P 500 fell 33.7%.
- Sharp swings, even in large funds. In the year to October 29, 2026, XAR fell as much as 26.6% from a peak and SHLD 25.4%. Volatility measures how widely prices swing. XAR's was 28.8% and SHLD's 24.8%.
- Daily leverage can compound losses. DFEN resets its 3x exposure every day, so long-run results can drift far from three times the index. In the year to October 29, 2026, it lost 34.8%. It fell as much as 55.5%, and its volatility was 68.2%.
- Foreign funds add currency and policy risk. KDEF holds 20 South Korean defense stocks and EUAD holds European ones, so local politics, defense budgets and exchange rates all matter. KDEF lost 26.8% in the year to October 29, 2026, with a worst drop of 48.4%.
Leveraged and inverse aerospace & defense ETFs (3x)
These funds aim for a multiple, or the opposite, of one day’s return, and reset every day. Held for longer than a day, their results can drift far from that multiple, especially when prices swing. They are trading tools, not long-term holdings. Why leveraged ETFs decay →
| Fund | Daily aim | Net assets | 1-year return |
|---|---|---|---|
| DFEN Direxion Daily Aerospace & Defense Bull 3X Shares | 3× | $384.1M | -34.8% |
List of all aerospace & defense ETFs, by size
| # | Fund | Net assets | Cost | Yield | YTD | 1 yr | 5 yr |
|---|---|---|---|---|---|---|---|
| 1 | ITA iShares U.S. Aerospace & Defense ETF | $14.44B | 0.37% | 0.09% | +0.2% | -0.3% | +16.4% |
| 2 | PPA Invesco Aerospace & Defense ETF | $8.26B | 0.58% | 0.43% | +0.6% | -1.3% | +17.3% |
| 3 | SHLD Global X Defense Tech ETF | $7.24B | 0.5% | 0.68% | -2.1% | -6.9% | — |
| 4 | XAR SPDR S&P Aerospace & Defense ETF | $6.47B | 0.35% | 0.19% | -6.9% | -10.5% | +14.0% |
| 5 | EUAD Select STOXX Europe Aerospace & Defense ETF | $1.24B | 0.5% | 0.43% | -6.7% | -11.2% | — |
| 6 | MISL First Trust Indxx Aerospace & Defense ETF | $801.9M | 0.6% | 0.07% | -3.1% | -5.2% | — |
| 7 | DFEN Direxion Daily Aerospace & Defense Bull 3X Shares Leveraged | $384.1M | 0.96% | 12.27% | -28.2% | -34.8% | +23.6% |
| 8 | KDEF PLUS Korea Defense Industry Index ETF | $112.9M | 0.65% | 8.86% | -22.4% | -26.8% | — |
| 9 | NATO Themes Transatlantic Defense ETF | $100.7M | 0.35% | 0.47% | -5.4% | -7.3% | — |
| 10 | GCAD Gabelli Commercial Aerospace and Defense ETF | $43.7M | 0% | 1.99% | +4.1% | +6.2% | — |
Questions investors ask about aerospace & defense ETFs
What is the largest aerospace and defense ETF?
The iShares U.S. Aerospace & Defense ETF (ITA) is the largest, with about $14.4 billion in net assets as of October 29, 2026. It launched in 2006 and has 49 holdings. The largest are General Electric at 22.61%, RTX at 14.82% and Boeing at 8.9%. Invesco's PPA comes next, at about $8.3 billion. Global X's SHLD follows at $7.2 billion and SPDR's XAR at $6.5 billion.
What is the cheapest aerospace and defense ETF?
SPDR's XAR and Themes' NATO charge 0.35% a year, the lowest in the group except for Gabelli's GCAD. GCAD lists an unusual 0% expense ratio, which is worth checking in its prospectus. ITA charges 0.37%, FOWF 0.49% and SHLD 0.50%. Invesco's PPA charges 0.58%. The leveraged DFEN costs the most, at 0.96%. Among the large funds, XAR and ITA cost the least.
ITA vs PPA: what is the difference?
Both are large index funds whose biggest holdings are US aerospace and defense companies, and 65.5% of their assets overlap. ITA is more concentrated, with GE at 22.61% and 75.15% in its top 10. It costs 0.37% a year. PPA tracks the SPADE Defense Index across 61 holdings, with RTX the largest at 8.3%. It costs 0.58%. Their returns were close: over the year to October 29, 2026, ITA lost 1.2% and PPA 1.3%.
Do aerospace and defense ETFs pay dividends?
Yes, but the income is small. All 11 funds with yield data made payouts, and the median yield was 0.43% as of October 29, 2026. ITA yielded 0.09%, XAR 0.19% and PPA 0.43%. WAR (10.15%) and KDEF (8.86%) showed far higher yields. Yields that high in a stock fund can come from one-time payouts that may not repeat. For most of these funds, dividends are a small part of the return.
Which aerospace and defense ETFs hold Lockheed Martin?
Most do. Lockheed Martin appears in 8 of the 12 funds, at a median weight of 5.17%. It is one of the five largest holdings in SHLD (8.34%), FOWF (7.96%), PPA (6.64%) and NATO (5.17%). It is not among ITA's five largest holdings, which are led by GE, RTX and Boeing. RTX is the most widely held stock, appearing in 9 of the 12 funds.
How many aerospace and defense ETFs are there?
This guide covers 12 US-listed aerospace and defense ETFs. The issuers include iShares, Invesco, Global X, SPDR, First Trust and Direxion. None of the 12 comes from Vanguard or Fidelity. The five largest are ITA, PPA, SHLD, XAR and EUAD. As of October 29, 2026, they held 96.2% of the group's roughly $39.2 billion. EUAD, NATO, FOWF, WAR and KDEF all launched in October 2024 or later.
What is DFEN, the 3x aerospace and defense ETF?
DFEN, the Direxion Daily Aerospace & Defense Bull 3X Shares, aims for three times its index's return for a single day, before fees. Because it resets daily, its results over months can drift far from three times the index, especially when prices bounce around. In the year to October 29, 2026, DFEN lost 34.8%, with a worst drop of 55.5%. ITA lost 1.2% over the same year. DFEN charges 0.96% and is designed as a short-term trading tool, not a long-term holding. The group has no inverse fund.
Is there a European aerospace and defense ETF?
Yes. EUAD, the Select STOXX Europe Aerospace & Defense ETF, tracks the STOXX Europe Total Market Aerospace & Defense Index. Its largest holdings are Airbus, MTU Aero Engines, BAE Systems, Rolls-Royce and Leonardo. It shares no holdings with ITA, PPA, SHLD or XAR. It held about $1.2 billion as of October 29, 2026, and charges 0.50%. NATO holds both US and European companies, such as Rolls-Royce. EUAD launched in October 2024, so its record is short.
Is there a Vanguard, Fidelity or Schwab aerospace & defense ETF?
No. None of the three offers a aerospace & defense ETF. The largest aerospace & defense ETFs come from iShares (ITA), Invesco (PPA) and Global X (SHLD), and customers of all three firms can buy other companies’ ETFs in their brokerage accounts.
