XAR vs ITA ETF Comparison 2026: Equal-Weight vs Cap-Weight Defense ETFs: AI Score, Valuation, Performance and Upside
XAR and ITA are both US aerospace and defense ETFs but with critically different portfolio constructions. XAR's equal-weight methodology diversifies across 30+ defense companies — preventing Boeing or Raytheon from dominating. ITA's cap-weight concentrates in Raytheon, Lockheed, Boeing, Northrop — the traditional defense primes. For investors concerned about Boeing concentration risk, XAR is preferable. For investors wanting pure defense prime contractor exposure, ITA's cap-weight delivers it.
XAR vs ITA — SPDR Aerospace & Defense ETF (equal-weight defense ETF spreading exposure across 30+ companies to avoid Boeing/Raytheon concentration) versus iShares US Aerospace & Defense ETF (cap-weight defense ETF concentrating in the largest US defense prime contractors — RTX, LMT, BA, NOC, GD — the primary beneficiaries of Pentagon budget increases).
ITA holds the edge across 3 of 5 key metrics in this comparison. XAR has delivered stronger 1-year price return (+5.51% vs +4.79% for ITA).
- want to avoid Boeing stock concentration risk in a defense ETF — XAR's equal-weight dilutes Boeing's manufacturing challenges and program overruns across 30+ holdings
- believe smaller defense contractors in electronics, drones, space, and cybersecurity offer better growth potential than large legacy prime contractors
- prefer more balanced exposure across the full defense sector spectrum rather than concentration in the 5 largest primes that dominate ITA
- are comfortable with more frequent equal-weight rebalancing transaction costs and higher exposure to smaller defense contractors with less predictable government contract flows
- want pure large-cap defense prime contractor concentration — Raytheon, Lockheed Martin, General Dynamics, Northrop Grumman as the primary beneficiaries of F-35, hypersonics, and missile defense program spending
- believe defense budget increases under geopolitical stress (Russia-Ukraine, China) primarily flow to large integrated defense primes with existing Pentagon relationships
- prefer cap-weight simplicity and lower rebalancing costs vs XAR's equal-weight approach — ITA's portfolio naturally concentrates in proven large defense contractors
- are comfortable with Boeing concentration risk within ITA and aware that Boeing underperformance can materially impact ITA returns
| Metric | XAR | ITA |
|---|---|---|
| ETF scorei | 63.0 | 56.0 |
| Latest closei | $238.85 | $212.16 |
| 1M returni | -15.93% | -13.71% |
| 6M returni | -7.68% | -4.50% |
| 1Y returni | +5.51% | +4.79% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | XAR | ITA |
|---|---|---|
| 1Y ago | $10.59K (+5.9%) started 2025-09-18 | $10.51K (+5.1%) started 2025-09-18 |
| 5Y ago | $21.52K (+115.2%) started 2021-09-20 | $22.66K (+126.6%) started 2021-09-20 |
| 10Y ago | $48.81K (+388.1%) started 2016-09-19 | $41.17K (+311.7%) started 2016-09-19 |
Hypothetical — past performance does not guarantee future results.
| Metric | XAR | ITA |
|---|---|---|
| Expense ratioi | 0.35% | 0.37% |
| Total assets (AUM)i | $5.85B | $13.63B |
| Dividend yieldi | 0.31% | 0.47% |
| Trailing P/Ei | 31.48 | 32.20 |
| Betai | 1.08 | 0.80 |
| 52-week change | 5.51% | 4.79% |
| Metric | XAR | ITA |
|---|---|---|
| 1Y returni | +5.51% | +4.79% |
| 6M returni | -7.68% | -4.50% |
| 1M returni | -15.93% | -13.71% |
| 1Y Sharpe ratio | 0.18 | 0.12 |
| Betai | 1.08 | 0.80 |
| Dividend yieldi | 0.31% | 0.47% |
| 5Y CAGR | +16.00% | +16.80% |
Over the past year, XAR and ITA have moved strongly in the same direction (correlation of 0.93), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | XAR | ITA |
|---|---|---|---|
| 1Y | Growthi | +5.51% | +4.79% |
| CAGRi | +5.52% | +4.79% | |
| Volatilityi | 29.66% | 23.24% | |
| Sharpe ratioi | 0.18 | 0.12 | |
| Sortino ratioi | 0.26 | 0.18 | |
| Max drawdowni | 19.50% | 16.12% | |
| Current drawdowni | 19.50% | 16.12% | |
| Avg drawdowni | 6.43% | 5.61% | |
| Ulcer Indexi | 7.89% | 7.08% | |
| Max daily dropi | 5.08% | 3.78% | |
| Max wkly dropi | 9.92% | 7.09% | |
| 5Y | Growthi | +109.80% | +117.21% |
| CAGRi | +16.00% | +16.80% | |
| Volatilityi | 24.02% | 20.36% | |
| Sharpe ratioi | 0.55 | 0.65 | |
| Sortino ratioi | 0.81 | 0.94 | |
| Max drawdowni | 27.55% | 18.72% | |
| Current drawdowni | 19.50% | 16.12% | |
| Avg drawdowni | 6.58% | 4.11% | |
| Ulcer Indexi | 8.78% | 5.78% | |
| Max daily dropi | 7.65% | 8.44% | |
| Max wkly dropi | 12.63% | 11.69% | |
| 10Y | Growthi | +352.60% | +270.21% |
| CAGRi | +16.30% | +13.99% | |
| Volatilityi | 24.97% | 23.36% | |
| Sharpe ratioi | 0.55 | 0.49 | |
| Sortino ratioi | 0.78 | 0.69 | |
| Max drawdowni | 46.37% | 51.00% | |
| Current drawdowni | 19.50% | 16.12% | |
| Avg drawdowni | 8.18% | 7.23% | |
| Ulcer Indexi | 11.90% | 11.46% | |
| Max daily dropi | 13.31% | 14.74% | |
| Max wkly dropi | 24.16% | 25.96% |
| Category | XAR | ITA |
|---|---|---|
| Fund name | State Street SPDR S&P Aerospace & Defense ETF | iShares U.S. Aerospace & Defense ETF |
| Type | ETF | ETF |
| Expense ratioi | 0.35% | 0.37% |
| Total assets (AUM)i | $5.85B | $13.63B |
| Dividend yieldi | 0.31% | 0.47% |
- Equal-weighting eliminates Boeing concentration risk: XAR's equal-weight methodology prevents Boeing's manufacturing difficulties and program overruns from dominating the ETF's performance — avoiding single-stock concentration risk
- Broader defense ecosystem exposure: XAR's equal-weight approach gives meaningfully more weight to smaller defense electronics, drone, and cybersecurity companies than cap-weight alternatives
- Full defense spectrum coverage: XAR includes prime contractors, space companies, defense electronics, and aerospace manufacturers equally — a comprehensive defense sector ETF
- Defense prime contractor concentration: ITA's market cap weighting emphasizes the largest US defense primes — RTX, LMT, GD, NOC are primary beneficiaries of Pentagon budget increases and major weapons programs
- Cap-weight alignment with defense budget spending: large defense primes capture most Pentagon program dollars — ITA's concentration reflects where actual government defense spending flows
- Lower rebalancing costs than XAR: cap-weight indices rebalance less frequently — lower transaction costs maintaining the index vs XAR's equal-weight rebalancing drag
- Smaller company underperformance risk: equal-weighting includes smaller defense companies that may not have the government contract scale of Lockheed Martin or Raytheon — smaller contractors have higher execution risk
- More frequent rebalancing costs: equal-weight indices require rebalancing as stocks move — creating more frequent transaction costs vs cap-weight alternatives like ITA
- 0.35% expense ratio: both XAR and ITA are expensive sector ETFs — investors should weigh the cost vs simply holding individual large defense contractors
- Boeing concentration risk: ITA holds Boeing as a top holding — Boeing's production challenges (737 MAX, manufacturing quality issues) can significantly drag ITA performance when Boeing underperforms
- Large-cap concentration misses smaller defense innovators: ITA's cap-weight underweights drone, cybersecurity, and emerging defense technology companies that could outperform traditional primes
- 0.40% expense ratio: slightly more expensive than XAR's 0.35% — both are expensive sector ETFs
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