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
A smart beta exchange traded fund, the State Street SPDR S&P Aerospace & Defense ETF (XAR - Free Report) debuted on 09/28/2011, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by State Street Investment Management, XAR has amassed assets over $5.52 billion, making it one of the largest ETFs in the Industrials ETFs. 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.
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.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
XAR's 12-month trailing dividend yield is 0.18%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 100% of the portfolio.
Looking at individual holdings, Vse Corp (VSEC) accounts for about 3.4% of total assets, followed by Axon Enterprise Inc (AXON) and Ati Inc (ATI).
Its top 10 holdings account for approximately 31.55% of XAR's total assets under management.
Performance and Risk
The ETF has lost about -5.84% and is down about -8.96% so far this year and in the past one year (as of 10/09/2026), respectively. XAR has traded between $218.75 and $296.73 during this last 52-week period.
The fund has a beta of 1.03 and standard deviation of 23.92% for the trailing three-year period, which makes XAR a medium risk choice in this particular space. With about 49 holdings, it has more concentrated exposure than peers .
Alternatives
State Street SPDR S&P Aerospace & Defense ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.46 billion in assets, iShares U.S. Aerospace & Defense ETF has $11.93 billion. PPA has an expense ratio of 0.58% and ITA changes 0.37%.
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.
View the Zacks #1 Rank List
Image: Bigstock
Is State Street SPDR S&P Aerospace & Defense ETF (XAR) a Strong ETF Right Now?
A smart beta exchange traded fund, the State Street SPDR S&P Aerospace & Defense ETF (XAR - Free Report) debuted on 09/28/2011, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by State Street Investment Management, XAR has amassed assets over $5.52 billion, making it one of the largest ETFs in the Industrials ETFs. 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.
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.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
XAR's 12-month trailing dividend yield is 0.18%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 100% of the portfolio.
Looking at individual holdings, Vse Corp (VSEC) accounts for about 3.4% of total assets, followed by Axon Enterprise Inc (AXON) and Ati Inc (ATI).
Its top 10 holdings account for approximately 31.55% of XAR's total assets under management.
Performance and Risk
The ETF has lost about -5.84% and is down about -8.96% so far this year and in the past one year (as of 10/09/2026), respectively. XAR has traded between $218.75 and $296.73 during this last 52-week period.
The fund has a beta of 1.03 and standard deviation of 23.92% for the trailing three-year period, which makes XAR a medium risk choice in this particular space. With about 49 holdings, it has more concentrated exposure than peers .
Alternatives
State Street SPDR S&P Aerospace & Defense ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.46 billion in assets, iShares U.S. Aerospace & Defense ETF has $11.93 billion. PPA has an expense ratio of 0.58% and ITA changes 0.37%.
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.