The SPDR S&P Aerospace & Defense ETF (
XAR Quick Quote XAR - Free Report) 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.
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 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 13, placing it in bottom 19%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.24 billion, making it one of the average sized 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 95.80% of the portfolio.
Looking at individual holdings, Virgin Galactic Holdings Inc (
SPCE Quick Quote SPCE - Free Report) accounts for about 4.82% of total assets, followed by Axon Enterprise Inc ( AXON Quick Quote AXON - Free Report) and Maxar Technologies Inc. ( MAXR Quick Quote MAXR - Free Report) .
The top 10 holdings account for about 39.77% of total assets under management.
Performance and Risk
So far this year, XAR has gained about 13.03%, and was up about 34.71% in the last one year (as of 10/26/2021). During this past 52-week period, the fund has traded between $84.30 and $136.44.
The ETF has a beta of 1.20 and standard deviation of 31.06% 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.
SPDR S&P 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, XAR is a good 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.
Invesco Aerospace & Defense ETF (
PPA Quick Quote PPA - Free Report) tracks SPADE Defense Index and the iShares U.S. Aerospace & Defense ETF ( ITA Quick Quote ITA - Free Report) tracks Dow Jones U.S. Select Aerospace & Defense Index. Invesco Aerospace & Defense ETF has $703.68 million in assets, iShares U.S. Aerospace & Defense ETF has $2.68 billion. PPA has an expense ratio of 0.59% and ITA charges 0.42%. Bottom Line
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