First Trust Indxx Aerospace & Defense ETF

First Trust Indxx Aerospace & Defense ETF (MISL) is an index fund that holds up to 50 US aerospace and defense stocks, from contractors like RTX and Lockheed Martin to space companies like SpaceX and Rocket Lab. Its rules count newer areas such as space, drones and cybersecurity alongside traditional aircraft suppliers. At 0.60% a year, it is the most expensive of eight similar funds, whose average is 0.37%.

• Over the year to Oct 27, 2026, MISL returned -5.2%, 5th of 8 among similar funds.
• Its worst full calendar year was 2023 (+14.8%); its best was 2025 (+41.3%).
• The deepest fall in its price history was 20% (Jan 16, 2026 to Oct 23, 2026), not yet recovered.

As of Jun 30, 2026, the fund held 39 securities; the ten largest made up 61.67% of assets.

By sector

• Over the three months to Jun 30, 2026, investors withdrew a net $661.7M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: -1.10%, +10.68%, -6.30%.

MISL tracks the Indxx US Aerospace & Defense Index. The index is built by Indxx, Inc., which is not affiliated with First Trust. The fund uses full replication. That means it normally owns every stock in the index, in the same proportions. To qualify, a company must be based in the US, pass screens for listing, price, size, float and trading volume, and earn at least 50% of its revenue from aerospace and defense. That covers traditional work, such as avionics, landing gear and aircraft parts, including parts for commercial airlines. It also covers newer areas: hypersonic weapons, directed-energy weapons, space launch and satellites, drones, and cybersecurity and military command systems.

The index picks the 50 largest eligible companies by market value, or all of them if fewer than 50 qualify. As of March 31, 2026, it held 38 stocks. Larger companies get bigger weights. No stock can be more than 8% of the index. Stocks weighing 5% or more can't add up to more than 45%. If they would, every other stock is capped at 4%. The index is rebalanced every quarter and its membership is reviewed twice a year. Indxx can also use its own judgment to add, remove or delay a stock.

The fund is "non-diversified," which means it can put more of its money into a few companies. As of June 30, 2026, its 10 largest holdings made up about 62% of assets.

• MISL charges 0.6% a year, versus an average of 0.37% for the similar funds below (8th of 8, cheapest first).

It is a concentrated bet on one industry, with high volatility and almost no income, so it fits best as a small add-on to a broader portfolio.

MISL could add targeted exposure to US defense, aerospace and space companies. It launched on October 25, 2022, after the 2022 bear market had bottomed, so it has no track record in the 2008, 2020 or 2022 downturns. It has not had a losing calendar year. Its weakest was 2023, at 14.88%. But it fell 20% from a January 16, 2026 peak to October 23, 2026, and had not recovered as of October 27, 2026. Anyone who has to sell shares during a drop like that locks in the loss. The yield was 0.07% as of October 27, 2026, paid once a year, so the fund provides almost no income. Its 0.60% expense ratio is above the 0.37% average of similar funds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.