​Aerospace and Defense ETF a Pick Amid Global Turmoil

MoneyShow  |


A constant barrage of geopolitical tensions coupled with the forceful rhetoric of President Trump has sent defense stocks and ETFs soaring, says Jim Woods, editor of Weekly ETF Report.

While the main reasons why defense ETFs are doing well right now are evident if you take a glance at recent world events — tensions with North Korea, the continued threat of ISIS and strained U.S. relations with Russia — they are not the only causes of this surge.

As the premier defense and aerospace ETF, the iShares U.S. Aerospace and Defense ETF (ITA) has daily fund flows in excess of $3 million and is in a position to take advantage of favorable developments in the defense sector, such as strong sector fundamentals, merger activity and increased defense spending.

Of the several major ETFs covering the defense and aerospace sector, ITA probably has the most straightforward investment strategy, as it diversifies by capping the weightings of the biggest securities.

In terms of performance, ITA has amassed an enviable year-to-date return of close to 30%, making it not only the biggest defense ETF in terms of assets at $4.3 billion under management, but also among the strongest performers this year.

The fund’s 0.44% expense ratio is not the cheapest in the sector, but also not the most expensive. ITA also offers a small 1.1% yield.

ITA invests most of its assets in pure-play defense and aerospace companies. Plus, 57% of the fund’s assets are invested in the top 10 holdings, and many big-name defense and aerospace contractors are on that list.

Boeing (BA) has the biggest allocation at 10.20% of the fund’s assets, followed by United Technologies (UTX), 7.92%; Lockheed Martin (LMT), 7.43%; General Dynamics (GD), 6.54%; and Raytheon (RTN), 6.16%. The fund is non-diversified.

Investors who anticipate that global turmoil and President Trump’s agenda will continue to boost defense stocks in the near future could find the iShares U.S. Aerospace and Defense ETF a worthwhile choice.

Jim Woods is editor of Successful Investing and Intelligence Report.

Subscribe to Weekly ETF Report here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
LMT Lockheed Martin Corporation 432.50 3.72 0.87 1,087,074 Trade
RTN Raytheon Company 231.24 1.01 0.44 2,673,374 Trade
GD General Dynamics Corporation 185.07 0.45 0.24 925,535 Trade
UTX United Technologies Corporation 153.19 -0.61 -0.40 3,699,957 Trade
BA The Boeing Company 323.05 5.26 1.66 17,798,203 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

World Economic Forum at Davos 2019 - Joseph Weinberg CEO PayCase, Chairman Shyft

Matt Bird sits down with Joseph Weinberg CEO PayCase, Chairman Shyft at the World Economic Forum at Davos 2019