We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is State Street SPDR S&P Aerospace & Defense ETF (XAR) a Strong ETF Right Now?
Read MoreHide Full Article
Designed to provide broad exposure to the Industrials ETFs category of the market, the State Street SPDR S&P Aerospace & Defense ETF (XAR - Free Report) is a smart beta exchange traded fund launched on 09/28/2011.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by State Street Investment Management. It has amassed assets over $5.97 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.33%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Karman Holdings Inc (KRMN) accounts for about 4.52% of total assets, followed by Rocket Lab Corp (RKLB) and Aerovironment Inc (AVAV).
XAR's top 10 holdings account for about 37.68% of its total assets under management.
Performance and Risk
The ETF has added roughly 18.32% and is up about 59.92% so far this year and in the past one year (as of 01/23/2026), respectively. XAR has traded between $144.94 and $292.74 during this last 52-week period.
The fund has a beta of 1.02 and standard deviation of 20.69% for the trailing three-year period, which makes XAR a medium risk choice in this particular space. With about 42 holdings, it has more concentrated exposure than peers .
Alternatives
State Street SPDR S&P Aerospace & Defense ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $7.95 billion in assets, iShares U.S. Aerospace & Defense ETF has $14.79 billion. PPA has an expense ratio of 0.58% and ITA changes 0.38%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is State Street SPDR S&P Aerospace & Defense ETF (XAR) a Strong ETF Right Now?
Designed to provide broad exposure to the Industrials ETFs category of the market, the State Street SPDR S&P Aerospace & Defense ETF (XAR - Free Report) is a smart beta exchange traded fund launched on 09/28/2011.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by State Street Investment Management. It has amassed assets over $5.97 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.33%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Karman Holdings Inc (KRMN) accounts for about 4.52% of total assets, followed by Rocket Lab Corp (RKLB) and Aerovironment Inc (AVAV).
XAR's top 10 holdings account for about 37.68% of its total assets under management.
Performance and Risk
The ETF has added roughly 18.32% and is up about 59.92% so far this year and in the past one year (as of 01/23/2026), respectively. XAR has traded between $144.94 and $292.74 during this last 52-week period.
The fund has a beta of 1.02 and standard deviation of 20.69% for the trailing three-year period, which makes XAR a medium risk choice in this particular space. With about 42 holdings, it has more concentrated exposure than peers .
Alternatives
State Street SPDR S&P Aerospace & Defense ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $7.95 billion in assets, iShares U.S. Aerospace & Defense ETF has $14.79 billion. PPA has an expense ratio of 0.58% and ITA changes 0.38%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs
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.