PPAETF

XAR and PPA are aerospace and defense ETFs with different strategies. XAR uses a modified equal-weight approach with a lower 0.35% expense ratio and has delivered stronger 5-year returns (112% vs 81%), making it more appealing to cost-conscious investors. PPA uses market-cap weighting, has higher fees at 0.58%, but offers a higher dividend yield of 0.4% versus XAR's 0.2%.

The Select STOXX Europe Aerospace & Defense ETF (EUAD) received a Zacks ETF Rank of 4 (Sell) and is not recommended for investors seeking aerospace and defense exposure. The ETF has underperformed with a 2.9% loss year-to-date and 7.92% decline over the past year. With concentrated holdings and a 0.5% expense ratio, better alternatives like Invesco Aerospace & Defense ETF (PPA) and iShares U.S. Aerospace & Defense ETF (ITA) are suggested.

Invesco Aerospace & Defense ETF (PPA) and First Trust Indxx Aerospace & Defense ETF (MISL) offer different approaches to defense sector investing. PPA, the larger and more established fund with $7.4B in AUM, delivers higher dividends (0.4% yield) and lower volatility with traditional aerospace exposure.

MISL, launched in 2022 with a more concentrated 39-holding portfolio, emphasizes next-gen defense tech including Palantir and SpaceX. Since 2022, PPA has outperformed with 117% total return (21.6% CAGR) versus MISL's 105% (19.8% CAGR), though both have slightly elevated expense ratios around 0.58-0.60%.

The State Street SPDR S&P Aerospace & Defense ETF (XAR) is analyzed as a smart beta ETF with $5.52 billion in assets and a low expense ratio of 0.35%. However, the fund has underperformed recently, declining 5.84% year-to-date and 8.96% over the past year as of October 9, 2026.

With a beta of 1.03 and standard deviation of 23.92%, it presents medium risk. Alternative aerospace & defense ETFs like Invesco's PPA and iShares' ITA are also discussed.

The First Trust Indxx Aerospace & Defense ETF (MISL) offers diversified exposure to the aerospace and defense sector with a 0.6% expense ratio and $771.54 million in assets. The ETF has declined 2.46% year-to-date and 3.32% over the past year, with top holdings including Palantir Technologies, RTX Corporation, and SpaceX. MISL received a Zacks ETF Rank of 2 (Buy), though larger competitors like ITA and PPA offer lower expense ratios.

The U.S. defense sector experienced a nearly 19% decline from early August through mid-October 2026 due to rising Treasury yields, military spending uncertainty ahead of midterms, and supply-chain constraints. Despite headwinds, the Aerospace sector is expected to report 11.8% earnings growth supported by NATO spending commitments and strong backlogs. Key defense contractors like Lockheed Martin and RTX are scheduled to report Q3 results, with investors focusing on cash flow generation and contract execution amid a higher cost of capital environment.

Boeing won a $20 billion contract from the U.S. Navy to develop the sixth-generation F/A-XX Strike Fighter, beating Northrop Grumman. The company also secured a $2.38 billion contract for additional F-15EX aircraft and received major commercial orders from Turkish Airlines (150 737 MAX jets) and Korean Air (103 aircraft).

Faster aircraft certification could provide additional momentum. Analysts remain bullish with an average price target of $275.32, representing a 47.98% upside from the current price.