Best Defense & Aerospace ETFs: Top Military Industry Funds

After post-Cold War consolidation reduced the number of U.S. prime defense contractors from 51 to just 5, the aerospace and defense sector became one of the most concentrated in the market. Defense and aerospace ETFs give exposure to this tightly knit group of companies — from missile and fighter jet manufacturers to military shipbuilders and defense IT providers.

The sector is shaped by long-term government contracts that create unusually stable revenue streams. The U.S. government is effectively the sole buyer for products like aircraft carriers, advanced fighter aircraft, and missile defense systems — a monopsony structure that distinguishes this industry from most others.

Notable defense and aerospace ETFs include:

• iShares U.S. Aerospace & Defense ETF (ITA) — Launched in May 2006, it tracks the Dow Jones U.S. Select Aerospace & Defense Index with a market-cap-weighted portfolio of roughly 40 domestic companies.
• Invesco Aerospace & Defense ETF (PPA) — Launched in October 2005, it follows the SPADE Defense Index, a bespoke benchmark built by a defense-focused analyst firm. Its modified weighting limits overexposure to the largest names.
• SPDR S&P Aerospace & Defense ETF (XAR) — Offered by State Street, it provides an alternative weighting approach within the same sector.

Top holdings across these funds typically include major defense companies such as Lockheed Martin, RTX Corporation, Northrop Grumman, General Dynamics, and Boeing, alongside specialized names like Huntington Ingalls (America’s largest military shipbuilder), L3Harris Technologies, and Palantir Technologies. European defense names — BAE Systems, Rolls-Royce, Saab, and Leonardo — appear in funds with broader international scope.

For a wider look at sector-specific fund options, see our ETFs by sector and industry overview.

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The table below lists defense and aerospace ETFs with live pricing, fund details, and performance data.