Invesco Aerospace & Defense ETF

PPA

Market cap $7.97B

Invesco Aerospace & Defense ETF is rated Buy, driven by President Trump's proposed $1.5T defense budget and robust U.S. military actions. PPA consistently outperforms the S&P 500, with a 10-year total return of $50,790 on $10,000 invested, and strong top-10 holdings with long dividend histories. The ETF benefits from U.S. government contracts, increased defense and space spending, and a diversified, low-turnover portfolio of established industry leaders.

Trump's $1.5T military budget and rising global tensions could lift defense ETFs and spill over into cybersecurity, AI, manufacturing and space ETFs.

In the last three months of 2025, the tech sector experienced what some called a “correction”.

The recent U.S. military operation in Venezuela reignited global attention on geopolitical risks. While this supports an eventual ramp-up of government defense budgets, investors are increasingly viewing aerospace and defense ETFs as a way to hedge potential geopolitical volatility.

Designed to provide broad exposure to the Industrials - Aerospace & Defense segment of the equity market, the Invesco Aerospace & Defense ETF (PPA) is a passively managed exchange traded fund launched on October 26, 2005.

The Invesco Aerospace & Defense ETF earns a strong buy rating for its superior diversification and risk-adjusted returns vs. the iShares U.S. Aerospace & Defense ETF. PPA's modified market-cap approach reduces concentration risk, capturing growth from mid-cap and specialized defense suppliers overlooked by ITA's top-heavy portfolio. Despite a higher 0.58% expense ratio, PPA delivers better long-term Sharpe ratios, lower volatility, and trades at cheaper valuations (P/E 26.98 vs. ITA's 30.76).

NATO members' expected $5B weapon purchases by 2025-end should fuel momentum in defense ETFs like SHLD and ITA.

A $93 million US weapon sale to India puts the spotlight on defense stocks like LMT and, by extension, fuels momentum for defense ETFs like SHLD.

Defense ETFs like XAR and ITA slipped in November, but long-term prospects remain strong amid surging global defense spending.

A fragile Gaza ceasefire and renewed violence are fueling investor demand for defense ETFs like ITA, SHLD and PPA.