Aerospace and defense focused exchange traded funds (ETFs) are supported by a network of strong commercial aerospace demand and increased defense spending. Both of these appear to have staying power despite rising fuel costs and waning housing values. PowerShares Aerospace and Defense Portfolio (PPA) fell 3% from October highs but this can be a result of a negative impact of the fuel and housing headwinds, reports Don Dion for Seeking Alpha.

The ETFs performance has tighter relations with U.S. government spending, geopolititcal events and global growth, giving a barrier against the U.S. economy. Top holdings make up 49.7% of assets and include Lockheed Martin (LMT), Boeing (BA) , Northrup Grumman (NOC), General Dynamics (GD) and Raytheon (RTN). PPA is up 22.2% year to date.

For those of you who appreciate choices there is also another ETF, iShares Dow Jones US Aerospace and Defense (ITA) that offers similar holdings and different weightings. ITA is up 26.3% year to date.

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.

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