Key Points
iShares U.S. Aerospace & Defense ETF offers a lower expense ratio of 0.38% compared to the 0.58% charged by Invesco Aerospace & Defense ETF
Invesco Aerospace & Defense ETF has delivered a higher 5-year total return of $2,270 per $1,000 invested.
iShares U.S. Aerospace & Defense ETF is more top-heavy, allocating 45% of its weight to its top three positions within its industrials-only portfolio
Investors eyeing the defense sector have funds to choose from to capitalize on government spending and global aerospace demand. The iShares U.S. Aerospace & Defense ETF(NYSEMKT:ITA) offers a lower expense ratio and higher liquidity, while Invesco Aerospace & Defense ETF(NYSEMKT:PPA) provides broader diversification and has historically achieved higher total returns.
Both provide exposure to major defense contractors and aerospace manufacturers, but they differ significantly in their weighting strategies and the depth of their underlying portfolios, influencing their long-term risk profiles.
Snapshot (cost & size)
| Metric | PPA | ITA |
|---|---|---|
| Issuer | Invesco | iShares |
| Expense ratio | 0.58% | 0.38% |
| 1-yr return (as of June 3, 2026) | 26.60% | 26.10% |
| Dividend yield | 0.40% | 0.50% |
| Beta | 0.73 | 0.74 |
| AUM | $8.0 billion | $13.6 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is the more affordable choice for cost-conscious investors with an expense ratio of 0.38%, sitting 20 basis points below the 0.58% charged by the Invesco fund. It also provides a slightly higher payout, which may appeal to those prioritizing current income alongside sector growth.
Performance & risk comparison
| Metric | PPA | ITA |
|---|---|---|
| Max drawdown (5 yr) | (18.40%) | (18.70%) |
| Growth of $1,000 over 5 years (total return) | $2,270 | $2,094 |
What's inside
The iShares U.S. Aerospace & Defense ETF provides concentrated exposure to the domestic defense sector, allocating nearly all of its assets to industrial companies. The portfolio includes 44 holdings and has a high concentration in its top names, with its largest positions including GE Aerospace(NYSE:GE) at 19.03%, RTX(NYSE:RTX) at 16.55%, and Boeing(NYSE:BA) at 8.91%. This fund was launched in 2006 and has paid $1.07 per share in dividends over the trailing 12 months.
The Invesco Aerospace & Defense ETF offers a different approach by tracking the SPADE Defense Index, resulting in a broader portfolio of 60 holdings. While 94% of the fund is in industrials, it also includes a 6% allocation to information technology stocks and less than 1% to communications services. Its top positions feature Boeing(NYSE:BA) at 8.01%, RTX(NYSE:RTX) at 7.91%, and General Electric(NYSE:GE)at 7.77%. Launched in 2005, the fund has a trailing-12-month dividend of $0.66 per share.
Which is the better buy?
Even though both funds use slightly different methodologies to track the aerospace and defense sectors, their top holdings and overall performance are similar. Over the past year, PPA, the Invesco Aerospace & Defense ETF, has returned 26.6%, edging out ITA, the iShares U.S. Aerospace & Defense ETF, which returned 26.1%. Similarly, over the past five years, the Invesco offering has a price return of around 145%, compared to iShares’ roughly 132%.
The five-year outperformance of the Invesco Aerospace & Defense ETF gives it the nod, even though it comes with a modestly higher expense ratio.
Still, the iShares U.S. Aerospace & Defense ETF offers a slightly higher dividend yield, which can be an important consideration for the more income-minded investor.
Given that both funds handily outperformed the S&P 500 over the past five years, either can be a sound choice for an investor seeking to concentrate in the defense sector.
For more guidance on ETF investing, check out the full guide at this link.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, GE Aerospace, and RTX. The Motley Fool has a disclosure policy.
