Defense and Aerospace ETF Soars on Global Spending Surge

The iShares U.S. Aerospace & Defense ETF (ITA) is demonstrating formidable performance, propelled by a dual-engine thrust of escalating worldwide military expenditures and the continued resurgence of commercial air travel.

This exchange-traded fund provides targeted exposure to leading U.S. corporations within the aerospace and defense sectors, employing a market-capitalization-weighted strategy. Its holdings are notably concentrated in a select group of industry titans. The fund's most significant positions include:

• Lockheed Martin
• Raytheon Technologies
• Boeing
• Northrop Grumman
• General Dynamics

This focused approach means the ETF's trajectory is closely linked to the fortunes of these dominant players.

Should investors sell immediately? Or is it worth buying iShares U.S. Aerospace & Defense ETF?

Geopolitical Pressures Fuel Defense Budgets

A primary catalyst for this robust performance is a global uptick in defense spending. Governments around the world are substantially increasing their military budgets in response to persistent geopolitical friction. A clear indicator of this trend is the U.S. Department of Defense's recent budget request for fiscal year 2025, which amounts to a substantial $849.8 billion. Strategic investment is increasingly directed toward advanced technology domains, including artificial intelligence for defense systems, unmanned platforms, and space-based technologies.

Commercial Aviation's Sustained Rebound

Concurrently, the commercial aerospace industry maintains its steady recovery from previous downturns. This positive momentum is underscored by labor market projections, which signal long-term industry health. For instance, France's aerospace sector is forecast to experience a 4.6% annual growth rate in its specialized workforce through 2030, highlighting ongoing modernization and production demands.

The combination of these powerful, structural drivers raises a pivotal question for investors: Can the iShares U.S. Aerospace & Defense ETF maintain its current upward climb amidst ongoing global uncertainties, and what is the long-term sustainability of this growth phase?