Aerospace and defense exchange traded funds have seen a double-digit jump in their underlying value ever since Russia invaded Ukraine on Feb. 24th. With the military conflict spotlighting geopolitical risks in general, ETFs that support defense equipment have caught a topside bid.
Four ETFs in particular that have experienced a substantial upside move are the Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA:DFEN), iShares U.S. Aerospace & Defense ETF (BATS:ITA), SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR), the SPDR S&P Kensho Future Security ETF (NYSEARCA:FITE), and the Invesco Aerospace & Defense ETF (NYSEARCA:PPA).
Since the invasion DFEN is +30.1%, FITE +13.9%, XAR +12.7%, ITA +9.3%, and PPA is +11.4%.
DFEN has led all four funds from a performance standpoint as it is a 3X leveraged ETF and is meant to accentuate swings in the underlying sector. Its top holdings are Raytheon Technologies (NYSE:RTX) and Boeing (NYSE:BA), weighted at 16.63% and 13.62%.
On the other hand, ITA was the poorest performing ETF but has the most significant assets under management, with $2.74B dedicated to the fund. ITA also has its top two holdings in RTX and BA but with a more densely 40% weighting in the two. ITA has a weighted position of RTX at 22.19% and 18.19% in BA.
XAR is the cheapest option in the aerospace and defense ETF market, with an expense ratio of 0.35%. Additionally, the ETF has a different top two on the leaderboard. XAR has top positions in Mercury Systems (NASDAQ:MRCY) weighted at 5.07%, and Lockheed Martin (NYSE:LMT) at 4.77%.
FITE offers investors the broadest diversification among defense ETFs as it has 70 holdings, which is 29 more than DFEN. The top holdings in FITE are LMT at 1.94% and VMware (NYSE:VMW) at 1.90%.
Moreover, YTD DFEN is +21%, FITE -2.4%, XAR +4.3%, ITA is +7.8% and PPA +7.5% is All have outperformed the benchmark SPDR S&P 500 Trust ETF (NYSEARCA:SPY), which is -8.9% in 2022.
For greater analysis of DFEN, ITA, XAR, and FITE, check out Seeking Alpha’s fundamental and quantitative analysis of each of the four funds.