Is the Aerospace and Defense Rally Sustainable? An ETF Perspective

The iShares U.S. Aerospace & Defense ETF (ITA) is capitalizing on a powerful global trend: nations are bolstering their military capabilities at an unprecedented rate. As geopolitical tensions intensify, this sector-specific fund has soared to new heights. However, its impressive concentration and significant gains are prompting investors to question the durability of this surge.

A key driver for the ETF is a worldwide surge in defense expenditure. Recent budget decisions underscore this commitment. For instance, Germany has approved a record post-Cold War defense budget of $128 billion for 2026, citing recent Russian provocations in NATO airspace. Similarly, the Netherlands is channeling an extra €3.4 billion into its armed forces. These national increases are part of a broader pattern, with global military spending hitting... Read more...