Well-Rounded Aerospace and Defense Fund Delivers Targeted Exposure

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.
sell expedia

This week’s featured exchange-traded fund (ETF), the SPDR S&P Aerospace & Defense ETF (XAR), tracks an index of U.S. aerospace and defense companies.

The fund currently has $1.01 billion assets under management and invests at least 80% in its holdings. Unlike some of its peer aerospace and defense funds, which tend to focus more on large-cap companies and often the very largest names, XAR aims to achieve a 40/40/20 weighting composition for large-, mid- and small-caps, respectively.

This mix of holdings allows XAR to deliver targeted coverage within the aerospace and defense sector to its investors. Although XAR does not offer options, it has attracted the attention of block traders with its strong underlying liquidity and a reasonable fee of 0.35%.
The fund has quarterly distributions and a dividend yield of 1.09%. This is relatively low when compared to competing funds like ITA (which is also more than four times the size of XAR), but XAR seeks a performance advantage with its focus on relatively smaller companies.

The defense sector has had a strong rally for the year, fueled by President Trump’s avowed support for the military and by threatening missile tests and words against the United States from North Korea’s dictator. XAR has been well-positioned to take advantage with its concentrated approach.

Year-to-date, XAR has returned 26.79%, beating out the S&P 500’s return of 14.16%. Analysts at State Street Global Advisors (SPDR) have put together a projected 3-5-year earnings per share growth estimate of 13.10% for XAR.

XAR currently has 35 holdings. The top five are Orbital ATK Inc., 4.37%; Triumph Group Inc., 4.29%; KLX Inc., 4.11%; Huntington Ingalls Industries Inc., 3.96%; and Hexcel Corporation, 3.94%.

For those seeking a fund to increase their exposure to the aerospace and defense segment, I encourage you to look at SPDR S&P Aerospace & Defense ETF (XAR).

Exclusive  Vanguard Value Fund Demonstrates the Wind Is Shifting

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

This week’s Alpha Algorithm returns you to a tech “fallen angel” -- a stock that had dropped out of favor, but has now returned to investors’ good graces. With the stock resuming its upward momentum over the past three weeks, the Alpha Algorithm strategies are piling in, clearly expecting the stock to rally into the New Year. The Priceline Group, Inc. (PCLN) provides online travel, restaurant reservation and related services. The company operates Book

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE