Why Aerospace & Defense ETFs are Rising

Aerospace and defense stocks have rallied lately with rising geopolitical tensions. The Russia-Ukraine war is unlikely to end soon, North Korean saber rattling has been on the rise, and China-Taiwan tensions have flared up since President Xi secured a third term in office.

Rising geopolitical tensions could result in increased defense spending by the US and its European allies as they try to counter military ambitions of China and Russia.

The midterm elections could result in split control of Congress leading to legislative gridlock. Increasing defense spending is one of the very few areas that the two parties agree on.

The iShares U.S. Aerospace & Defense ETF ITA tracks a market-cap-weighted index of companies in the aerospace and defense sector. Raytheon Technologies RTX, Lockheed Martin (LMT), Boeing BA and Northrop Grumman NOC are its top holdings.

The SPDR S&P Aerospace & Defense ETF XAR is an equal-weighted ETF. The Invesco Aerospace & Defense Portfolio PPA invests in companies involved in the development, manufacturing, operations and support of US defense, homeland security and aerospace operations.

Please watch the short video above to learn more about these ETFs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.