The iShares U.S. Aerospace & Defense ETF (BATS: ITA), PowerShares Aerospace & Defense Portfolio (NYSEArca: PPA) and the SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR) are among this year’s best-performing non-leveraged exchange traded funds, a theme that has been bolstered by geopolitical issues.
Aerospace and defense stocks are part of the broader industrial sector and have been important drivers of the sector’s performance over the past year. In fact, aerospace and defense names have been industrial leaders.
XAR is an equal-weight ETF. PPA holds 50 stocks “involved in the development, manufacturing, operations and support of US defense, homeland security and aerospace operations,” according to PowerShares.
“Regardless of structure, the two ETFs (ITA and PPA) have performed in a remarkably similar manner. Both have five-year average annual gains of about 24%, three-year average gains of about 18% (through Oct. 31) and year-to-date gains of around 30%,” reports Investor’s Business Daily.
The specter of war with North Korea, which has previously boosted aerospace and defense ETFs, is again serving as an upside catalyst for the group. Aerospace and defense names have been industrial leaders. Boeing and United Technologies are two of the best-performing Dow stocks this years.