For the foreseeable future, there will be demand for defense companies and the products they make. Defense stocks tend not to be as glamorous as high-growth sectors like tech. However, they provide reliable revenue and income from a customer -- the U.S. government -- with a seemingly insatiable appetite for their products.
Defense stocks tend to be stable contributors to an income-focused portfolio. Their predictable long-term revenue streams translate into solid dividends and healthy returns for investors.
Defense ETFs are a type of investment that holds a basket of defense stocks, allowing investors to get exposure to multiple stocks in the sector instead of having to choose between the various companies.
Since no single defense contractor makes everything, an investor would have to buy all the largest defense companies to gain full exposure to the sector. With that in mind, it might make more sense to invest in defense through an exchange-traded fund (ETF) that gives you a small interest in a large number of companies with ties to the aerospace and defense market.
The top six
Six best defense ETFs to consider in 2025
Here is a list of some of the top defense-focused ETFs:
ETFs 1 - 3
1. iShares U.S. Aerospace & Defense ETF
The iShares U.S. Aerospace & Defense ETF (ITA -0.87%) is the largest ETF focused on defense, with $8.1 billion in net assets as of mid-2025. The ETF is designed to provide exposure to domestic United States aerospace and defense companies and the commercial aerospace industry. As of mid-2025, the top five holdings in the iShares U.S. Aerospace & Defense ETF were:
- GE Aerospace (GE -0.33%)
- RTX (RTX -1.25%)
- Boeing (BA -0.54%)
- General Dynamics (GD -0.1%)
- TransDigm Group (TDG 0.19%)
The top five holdings represent just over 53% of the total assets in a portfolio that includes 39 stocks. The iShares U.S. Aerospace & Defense ETF has a 0.40% expense ratio.
2. Invesco Aerospace & Defense ETF
The Invesco Aerospace & Defense ETF (PPA -0.92%) is based on the SPADE Defense Index, designed to identify companies involved in the development, manufacturing, operations, and support of the U.S. defense, homeland security, and aerospace sectors. The ETF has about $5.7 billion in assets. As of mid-2025, the top five holdings in the Invesco Aerospace & Defense ETF were:
- Boeing
- GE Aerospace
- RTX
- Lockheed Martin (LMT -0.13%)
- Northrop Grumman (NOC 0.36%)
The ETF has 57 total holdings, with the top five representing about 35% of the total portfolio. The Invesco Aerospace & Defense ETF has a 0.57% expense ratio.
3. SPDR S&P Aerospace & Defense ETF
SPDR S&P Aerospace & Defense ETF (XAR -1.28%) has $3.6 billion in assets under management and invests in the stocks that comprise the S&P Aerospace & Defense Select Industry Index. The index attempts to broaden exposure past the so-called "prime" contractors that dominate the top end of the defense market, blending in a mix of mid-cap and small-cap industry exposure.
As of mid-2025, the top five holdings in the SPDR S&P Aerospace & Defense ETF were:
- Rocket Lab USA (RKLB 1.42%)
- AeroVironment (AVAV -3.02%)
- Huntington Ingalls Industries (HII -1.27%)
- Kratos Defense & Security Solutions (KTOS -3.97%)
- Woodward (WWD -0.95%)
The top five holdings represent about 19.3% of the portfolio's total assets. The SPDR Aerospace & Defense ETF has a 0.35% expense ratio and 39 holdings.
ETFs 4 - 6
4. ARK Space Exploration & Innovation ETF
The ARK Space Exploration & Innovation ETF (ARKX -1.39%) is an aerospace-focused, actively managed fund run by Cathie Wood's Ark Invest. As with most of Ark's portfolio, this ETF is focused primarily on growth.
In this case, that means the ARK Space Exploration ETF has a lot of its assets in space-focused companies, as well as enabling technologies companies and others that support aerospace missions. The fund has about $289 million in assets under management. As of mid-2025, the top five holdings in the ARK Space Exploration & Innovation ETF were:
- Rocket Lab USA
- Kratos Defense & Security
- Iridium Communications (IRDM 1.06%)
- AeroVironment
- Archer Aviation (ACHR -2.55%)
The top five holdings represent about 42% of the total portfolio. ARK Space Exploration & Innovation ETF has a 0.75% expense ratio.
5. Direxion Daily Aerospace & Defense Bull 3X Shares
The Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN -2.66%) is intended to generate a 300% daily return compared to its benchmark, the Dow Jones U.S. Select Aerospace & Defense Index. The fund does that by using leverage. Investors should be aware that, along with the potential for added reward, leveraged ETFs come with a lot more risks than standard ETFs.
Direxion states on its website that its leveraged ETFs are best for "aggressive" investors with a "willingness to accept substantial losses in short periods of time." The fund has about $226 million in net assets. As of July 2025, the top five holdings of the Direxion Daily Aerospace & Defense Bull 3X Shares ETF were:
- GE Aerospace
- RTX
- Boeing
- Northrop Grumman
- General Dynamics
Those five holdings make up 55% of the portfolio. The Direxion Daily Aerospace & Defense Bull 3X has an expense ratio of 0.95%.
6. SPDR S&P Kensho Future Security ETF
The SPDR S&P Kensho Future Security ETF (FITE -0.77%) tracks the S&P Kensho Future Security Index, a modernized version of a defense index. The Kensho index is designed to track companies focused on issues such as cybersecurity, advanced border security, military robotics, drones, and space technology. This is a relatively new fund and index.
The fund has about $53 million in assets. As of mid-2025, the top five holdings in the SPDR S&P Kensho Future Security ETF were:
The fund reports that about 30% of its assets are in aerospace and defense companies, with 28% in systems software companies and 9% in communications equipment makers. The SPDR S&P Kensho Future Security ETF has an expense ratio of 0.45%.
Related investing topics
Should I invest?
Are defense ETFs right for you?
When markets get volatile, it's nice to have a little diversification in your portfolio. Defense ETFs, like ETFs focused on the broader industrials sector, are unlikely to generate market-beating returns day in and day out. However, they do provide a basket of companies that tend to perform well in challenging times and offer a steady stream of income throughout the cycle.
The world can be a dangerous place. Investors may sleep better knowing they have companies in their portfolios that are designed to keep them safe when times get tough.
FAQ
Defense ETFs FAQ
What is the highest-rated defense ETF?
There is no single way to rate ETFs. Investors looking for the largest defense ETF should consider the iShares U.S. Aerospace & Defense ETF. Those interested in past performance and willing to accept added risk would likely view the Direxion Daily Aerospace & Defense Bull 3X Shares -- the top-performing of these choices during the 12 months ending July 2025 -- as the best choice.
Is there a military defense ETF?
Most of the defense ETFs also have substantial commercial aerospace exposure. However, the Kensho Future Security ETF is an intriguing option for investors focused solely on military security and cybersecurity.
Which is better, the iShares ETF or Invesco ETF?
Both are solid, but they offer slightly different options for investors. The iShares fund has a lower expense ratio, which is an important factor any time you are looking at ETFs. However, its two largest holdings are tied closely to the commercial aerospace sector, not defense. So, the Invesco ETF could be a better choice for investors most interested in defense companies.
Does Vanguard have a defense ETF?
Vanguard offers a number of industrial-focused ETFs that have exposure to some defense companies, but it does not offer a stand-alone, defense-focused ETF. The other ETFs listed here can be purchased through a Vanguard account.
Is there an ETF for defense stocks?
There are a number of defense-related ETFs, including those featured on this page. However, it should be noted that most defense ETFs also have commercial aerospace exposure and are not pure-play defense investments. The Kensho Future Security ETF is an option for investors focused solely on military security and cybersecurity.
What is the best defense stock?
Choosing the best stock for everyone is difficult because every investor has their own unique set of circumstances. But speaking generally, Lockheed Martin and Northrop Grumman are considered the top choices for long-term investors seeking exposure to individual names among the defense prime contractors.
Are Defense ETFs suitable for long-term investors?
Defense is a very long-cycle business, with it sometimes taking five years or longer for new contract awards to translate into revenue. That characteristic, coupled with the ability of defense stocks to pay stable dividends, makes defense ETFs best for long-term investors instead of market timers.
How do defense ETFs perform during war or geopolitical conflict?
Not surprisingly, when war is in the news, defense stocks tend to get a lot of attention. And defense ETFs tend to see a surge when a conflict breaks out. However, those surges are hardly ever sustainable, since new defense equipment takes years to be produced and there is usually very little impact on near-term numbers. Arguably, defense stocks do better in times of peace because government investment in research and development (R&D) tends to be higher margin for the companies than the government simply buying replacements for used equipment.
