Driven by ongoing geopolitical tensions and long-term investments from the U.S. government and its allies, defense spending is expected to remain high for years to come. Although defense companies rarely make headlines like high-growth tech stocks, they tend to generate stable revenue from long-term government contracts and deliver reliable returns for investors.
For investors looking to gain exposure to the defense industry, defense ETFs offer a simple investment approach. These funds hold diversified portfolios of aerospace and defense companies, spreading risk across multiple firms and projects while avoiding the complexity of picking individual stocks. Diversification is especially important in an industry where no single company does it all, and where contract wins or delays can affect individual stock performance.
Here are some top defense ETFs worth noting:
This ETF is the largest defense-themed ETF, with net assets of $13.3 billion as of May 2026. Its objective is to provide exposure to U.S. aerospace, defense companies, and the commercial aviation industry. As of May 2026, its top five holdings are GE Aerospace (GE), RTX (RTX), Boeing (BA), General Dynamics (GD), and Howmet Aerospace (HWM). The top five holdings together account for just over half of the portfolio’s total assets, and the overall portfolio includes more than 40 stocks. The ETF has an expense ratio of 0.38%.
This ETF tracks the SPADE Defense Index, which selects companies involved in the development, manufacturing, operations, and support of U.S. defense, homeland security, and aerospace sectors. As of May 2026, the fund has approximately $7.9 billion in assets. Its top holdings include Boeing, GE Aerospace, RTX, and Lockheed Martin (LMT). The ETF holds about 60 stocks in total and has an expense ratio of 0.58%.
With $5.8 billion in assets under management, this ETF invests in the components of the S&P Aerospace & Defense Select Industry Index. The index seeks to broaden its investment scope beyond the prime contractors dominating the high end of the defense market, including mid- and small-cap industry companies. As of May 2026, its top five holdings are BWX Technologies (BWXT), Rocket Lab (RKLB), Hexcel (HXL), Boeing, and Carpenter Technology (CRS). The top five holdings account for about 18% of total assets. The ETF holds approximately 40 stocks and has an expense ratio of 0.35%.
Summary: For investors seeking to benefit from rising defense spending without betting on a single contractor, the three ETFs above offer different options for diversification, potential returns, and long-term resilience. ITA is the largest with a relatively low expense ratio; PPA has more concentrated exposure to top-tier companies; and XAR achieves broader industry coverage by including small- and mid-cap stocks. Investors can choose based on their own risk tolerance and allocation needs.
