Should You Invest in the Invesco Aerospace & Defense ETF (PPA)?

Looking for broad exposure to the Industrials - Aerospace & Defense segment of the equity market? You should consider the Invesco Aerospace & Defense ETF (PPA), a passively managed exchange traded fund launched on 10/26/2005.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Aerospace & Defense is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $5.61 billion, making it one of the largest ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. PPA seeks to match the performance of the SPADE Defense Index before fees and expenses.

The SPADE Defense Index is comprised of approximately 50 U.S. companies whose shares are listed on a U.S. Exchange. These are companies that are principally engaged in the research, development, manufacture, operation and support of defense, military, homeland security and space operations.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.46%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 93.10% of the portfolio.

Looking at individual holdings, General Electric Co (GE) accounts for about 7.93% of total assets, followed by Boeing Co/the (BA) and Rtx Corp (RTX).

The top 10 holdings account for about 55.65% of total assets under management.

Performance and Risk

So far this year, PPA return is roughly 22.69%, and was up about 36.87% in the last one year (as of 06/30/2025). During this past 52-week period, the fund has traded between $102.05 and $140.56.

The ETF has a beta of 0.85 and standard deviation of 17.50% for the trailing three-year period, making it a medium risk choice in the space. With about 58 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Aerospace & Defense ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PPA is a reasonable option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

SPDR S&P Aerospace & Defense ETF (XAR) tracks S&P Aerospace & Defense Select Industry Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. SPDR S&P Aerospace & Defense ETF has $3.53 billion in assets, iShares U.S. Aerospace & Defense ETF has $8.23 billion. XAR has an expense ratio of 0.35% 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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This article originally published on Zacks Investment Research (zacks.com).

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