Designed to provide broad exposure to the Industrials - Aerospace & Defense segment of the equity market, the iShares U.S. Aerospace & Defense ETF (ITA Quick QuoteITA - Free Report) is a passively managed exchange traded fund launched on 05/01/2006.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 14, placing it in bottom 13%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $3.66 billion, making it one of the largest ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. ITA seeks to match the performance of the Dow Jones U.S. Select Aerospace & Defense Index before fees and expenses.

The Dow Jones U.S. Select Aerospace & Defense Index measures the performance of the aerospace and defense sector of the U.S. equity market.

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 0.42%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.80%.

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 99.30% of the portfolio.

Looking at individual holdings, Raytheon Technologies Corp (RTX Quick QuoteRTX - Free Report) accounts for about 22.61% of total assets, followed by Boeing (BA Quick QuoteBA - Free Report) and Lockheed Martin Corp (LMT Quick QuoteLMT - Free Report) .

The top 10 holdings account for about 76.86% of total assets under management.

Performance and Risk

So far this year, ITA has lost about -5.94%, and is down about -9.09% in the last one year (as of 07/14/2022). During this past 52-week period, the fund has traded between $93.66 and $112.95.

The ETF has a beta of 1.06 and standard deviation of 32.12% for the trailing three-year period, making it a medium risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

IShares U.S. 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, ITA 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.

SPDR S&P Aerospace & Defense ETF (XAR Quick QuoteXAR - Free Report) tracks S&P Aerospace & Defense Select Industry Index and the Invesco Aerospace & Defense ETF (PPA Quick QuotePPA - Free Report) tracks SPADE Defense Index. SPDR S&P Aerospace & Defense ETF has $1.22 billion in assets, Invesco Aerospace & Defense ETF has $1.32 billion. XAR has an expense ratio of 0.35% and PPA charges 0.61%.

Bottom Line

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