America’s involvement in Iraq and the money the government is spending seems to be dominant in the news, which can affect the defense industry exchange traded funds (ETFs). We reached the 4-year anniversary for the Iraqi invasion and during this time, defense contractors have seen strong profits, reports Joanne Von Alroth of Investor’s Business Daily. In 2006 alone, the U.S. defense budget was $422 billion.
iShares Dow Jones U.S. Aerospace (ITA) and PowerShares Aerospace & Defense (PPA) hold companies that reap the benefits of increased spending in Iraq. Both companies hold United Technologies (UTX), maker of the Black Hawk and Comanche helicopters; Lockheed Martin (LMT), the aeronautics maker; and General Dynamics (GD), which builds information, combat, shipbuilding and marine systems.ITA is up 7% year-to-date, while PPA is up 5%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.