The SPDR S&P Aerospace & Defense ETF (XAR) was launched on 09/28/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Industrials - Aerospace & Defense segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Aerospace & Defense is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $2.33 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. XAR seeks to match the performance of the S&P Aerospace & Defense Select Industry Index before fees and expenses.
The S&P Aerospace & Defense Select Industry Index represents the aerospace & defense sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Aerospace & Defense Index is a modified equal weight index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.77%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 100% of the portfolio.
Looking at individual holdings, General Electric (GE) accounts for about 5.28% of total assets, followed by Rtx Corp (RTX) and Transdigm Group Inc (TDG).
The top 10 holdings account for about 47.12% of total assets under management.
Performance and Risk
So far this year, XAR has lost about -11.84%, and it's up approximately 6.66% in the last one year (as of 04/08/2025). During this past 52-week period, the fund has traded between $132.10 and $180.77.
The ETF has a beta of 1.01 and standard deviation of 21.76% for the trailing three-year period, making it a medium risk choice in the space. With about 35 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Aerospace & Defense ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XAR is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco Aerospace & Defense ETF (PPA) tracks SPADE Defense Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. Invesco Aerospace & Defense ETF has $4.10 billion in assets, iShares U.S. Aerospace & Defense ETF has $5.55 billion. PPA has an expense ratio of 0.57% and ITA charges 0.40%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports GE Aerospace (GE): Free Stock Analysis Report Transdigm Group Incorporated (TDG): Free Stock Analysis Report iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Invesco Aerospace & Defense ETF (PPA): ETF Research Reports RTX Corporation (RTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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