XAR - ITA: Boeing Allocation Dims Outlook For This Defense ETF

2024-03-27 14:48:54 ET

Summary

• Geopolitical tensions have led to an increase in military spending, benefiting defense stocks.
• The iShares U.S. Aerospace & Defense ETF is the largest defense-focused ETF, but its composition, particularly its heavy exposure to Boeing, may hinder its performance.
• The outlook for the defense sector is positive, but ITA may not be the best choice for exposure to this sector.

Investment Thesis

As global geopolitical tensions remain elevated, military spending has started a meaningful uptick. A slew of conflicts witnessed since late 2020, starting from the east-Caucasus regions to eastern Europe and lately seen in the Middle East, have put sovereign entities across the world on guard. These tensions have also spilled out onto global shipping routes and trade regions....

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