The PowerShares Aerospace & Defense Portfolio (NYSEArca: PPA) is up 7.4% this year. PPA does offer ample exposure to the heavyweights of the aerospace industry, such as Boeing and United Technologies, but the ETF also features robust exposure to mid- and small-cap names as those market capitalizations combine for almost 60% of the ETF’s weight.
PPA has taken in $35 million of its $133.3 million in AUM this year and over the past month, it was one of the better PowerShares ETFs in terms of inflows.
The SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR) has been a decent performer this year as well and is coming of a 2013 in which it tussled with ITA for top honors among all non-leveraged industrial ETFs. http://www.etftrends.com/2014/01/aerospace-etf-showdown-so-good-its-hard-to-go-wrong/
Home to 37 stocks, XAR uses more of an equal weight approach to aerospace group, though the ETF’s weighted average market value of $20.5 billion indicates the fund is not excessively exposed to small-caps. There has been talk that industrials are somewhat expensive on valuation, perhaps the result of significant run-ups in the groups largest constituents dating back to 2013.
The high valuations are seen more in cap-weighted fare as ITA sports a P/E ratio of 21.2 compared to 16.8 for XAR. https://www.spdrs.com/product/fund.seam?ticker=XAR
SPDR S&P Aerospace & Defense ETF
