Despite the threats to the budget, PowerShares Aerospace & Defense (NYSEArca: PPA) and iShares Dow Jones U.S. Aerospace & Defense (NYSEArca: ITA) have done fairly well this year; PPA is up 8.8% year-to-date, while ITA has done better, up 15.4%.
There’s no point in sounding the death knell for defense ETFs just yet, since the cuts aren’t actually in place and government spending isn’t the only source of revenue for these companies. Many of these companies are diversified in other areas, such as commercial aircraft, satellites, human space flight and other services.
Both funds are above their long-term trend lines, so there’s a trend there that might be worth exploring if you want to get exposure to this sector.
Tisha Guerrero contributed to this article.