Increased Spending Should Boost Defense ETFs

Congress is considering two separate defense spending issues - the Pentagon's budget and funds for the wars in Iraq and Afghanistan - meaning defense sector ETFs are getting a boost.

Even though Democrats are threatening to pull the plug on funding the war, there's a big need for other defense spending such as heightened border patrol, homeland security, and ongoing Afghanistan operations, reports Trang Ho for Investor's Business Daily.

For the year, iShares Dow Jones U.S. Aerospace and Defense Index Fund (ITA) is up 14% and PowerShares Aerospace and Defense Portfolio (PPA) is up 12%. The government isn't the only one wanting to buy jets. There is also commercial demand for jets from airline companies, wealthy people, CEOs, and foreign companies.

ITA vs. PPA 1-yr chart: