Defense Sector Momentum Fuels iShares Aerospace & Defense ETF

ETF Snapshot & Recent Performance
- Assets Under Management (AUM): Approximately $14.6 billion
- Expense Ratio: 0.38%
- Portfolio Composition: The top ten holdings account for nearly 75% of the fund, which contains 46 individual securities (data as of January 12, 2026).
- Short-Term Returns (NAV/Price): +0.68% over one week; +13.63% over one month; +10.97% year-to-date.
- Investor Flows: The fund has seen substantial net inflows of roughly $3.84 billion over the past year. More recently, AUM grew by $1.09 billion in five days and by $2.49 billion over one month.

Portfolio Concentration and Key Drivers
This exchange-traded fund tracks the Dow Jones U.S. Select Aerospace & Defense Index using a market-cap weighting methodology. This approach results in significant exposure to a handful of major industry players. As of January 12, the ten largest positions and their respective weightings are:
GE Aerospace (20.69%), RTX (15.41%), Boeing (8.16%), L3Harris (4.63%), Lockheed Martin (4.58%), Howmet (4.48%), Northrop Grumman (4.40%), Axon (4.26%), TransDigm (4.21%), and General Dynamics (4.08%).

Performance is heavily influenced by the price action of these dominant constituents. L3Harris shares jumped in mid-January following news of the major government investment. Huntington Ingalls posted gains of 10.65% in the past week and 25.97% over the last month. Lockheed Martin advanced 19.21% in one month, with an 18.31% year-to-date increase. Boeing and General Dynamics also contributed positively with double-digit and single-digit monthly gains, respectively. The market-weighted structure ensures these large-cap companies dictate the fund's return profile.

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

Valuation, Liquidity, and Competitive Landscape
With approximately $14.58 billion in AUM, ITA recently traded near its 52-week high (NAV $239.09; 52-week range $135.24–$239.09), exhibiting a slight premium of 0.03%. The fund is highly liquid, with an average daily trading volume of about 1.07 million shares.

Comparisons with peer ETFs reveal differences in strategy, cost, and size. The SPDR S&P Aerospace & Defense ETF (XAR), which employs an equal-weight strategy, has returned 16.66% year-to-date and manages around $2.73 billion. The Invesco Aerospace & Defense ETF (PPA) is up 11.93% YTD with an AUM of approximately $2.87 billion. XAR's methodology reduces single-stock concentration risk, whereas ITA and PPA maintain heavier tilts toward the sector's largest corporations.

Outlook and Concluding Analysis
Forward-looking catalysts for the fund include its quarterly rebalancing, ongoing geopolitical tensions, rising national defense budgets, and technological modernization pushes in areas like artificial intelligence and autonomous systems. From a valuation perspective, General Dynamics trades at a P/E ratio of about 23.2x, below the industry average of 40.5x, while several other major holdings are considered relatively richly priced. Technically, many core positions are trading near their yearly or all-time highs.

In summary, the recent rally has been powered by a narrow group of major aerospace and defense stocks, supported by government spending announcements. The sustainability of this momentum will largely depend on subsequent budget decisions, the awarding of major contracts, and the performance of the fund's largest holdings. Consequently, the ETF remains highly sensitive to price movements in its top-weighted companies and to political decisions affecting defense expenditures.