This article was originally published on ETFTrends.com.
The broad industrial sector is not impressing this year, but aerospace and defense stocks and exchange traded funds did not get that memo. The iShares U.S. Aerospace & Defense ETF (Cboe:ITA) , the largest aerospace and defense ETF, is up nearly 16% year-to-date.
Impressive statistics for aerospace ETFs do not end there. Aerospace and defense stocks are part of the broader industrial sector and have been important drivers of the sector’s performance over the past year. In fact, aerospace and defense names have been industrial leaders. Rivals to ITA, the largest ETF in this market segment, include the PowerShares Aerospace & Defense Portfolio (PPA) and the SPDR S&P Aerospace & Defense ETF (XAR) .
On Wednesday, all three of those ETFs hit all-time highs.
“The U.S. aerospace and defense ETF, the ITA, hit an all-time high on Wednesday, bringing its 2018 gains to 16 percent. The ETF has gained 12 percent in just the last three months, driven in part by heavy defense spending,” according to CNBC.
Broad Strength in Aerospace, Defense Stocks
ITA, which tracks the Dow Jones U.S. Select Aerospace & Defense Index, holds 39 stocks and is a cap-weighted fund, meaning it is dominated by the largest aerospace and defense stocks.
Boeing, Lockheed Martin and Raytheon combine for nearly 24% of ITA's roster and that is a plus in the current environment.
“The broader group is starting to break out in a more substantial way than it had even just a few weeks ago. Lockheed Martin has seen a similar breakout on the chart, Miller Tabak Equity Strategist Matt Maley said, though pointed out the stock is nearing an overbought condition,” according to CNBC.
Traders looking for a more aggressive play on aerospace equities can consider the Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN) . DFEN, which debuted earlier this year, seeks to deliver triple the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index.
For more information on the defense industry, visit our aerospace & defense category.
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