How does the defense budget affect XAR and ITA?

US defense budgets above $850B annually primarily benefit the large defense primes — Raytheon, Lockheed Martin, General Dynamics, and Northrop Grumman dominating major weapons programs. ITA's cap-weight captures this spending concentration in its top holdings. XAR spreads the defense budget benefit more evenly — some smaller contractors benefit disproportionately from specific programs like drone warfare or electronic warfare.

Are defense ETFs affected by geopolitical events?

Yes — defense stocks often rally during geopolitical conflicts or rising threat perceptions as market participants anticipate defense budget increases and accelerated weapons procurement. The Russia-Ukraine war in 2022 was a notable catalyst for both XAR and ITA. Defense ETFs can also face ESG-driven outflows as some investors screen out defense holdings — creating periodic selling pressure unrelated to fundamentals.

Is there a pure cybersecurity defense ETF alternative?

For investors specifically interested in defense-adjacent cybersecurity (government and military cyber contracts), CIBR (First Trust NASDAQ Cybersecurity ETF) and BUG (Global X Cybersecurity ETF) provide more focused cybersecurity exposure beyond what XAR or ITA include. These pair well with XAR or ITA for complete US national security investment exposure across kinetic (weapons) and cyber defense sectors.

brimindinvest.com / compare / xar-vs-itaLIVE

XAR

SPDR S&P Aerospace & Defense ETF · Sector ETF

$284.29

+9.57% this month

VERSUS

⟷

COMPARE

ITA

iShares U.S. Aerospace & Defense ETF · Sector ETF

$238.99

+9.54% this month

Scoreboard verdict

Across expense ratio, momentum, yield, fund size, risk

XAR

2

ITA

3

ITA LEADS 3/5

Comparison scoreboard

ITA LEADS 3/5

Exp. Ratio

XAR ✓0.35%

ITA 0.38%

1Y Return

XAR ✓+45.19%

ITA +34.36%

Div. Yield

XAR 0.30%

ITA ✓0.46%

AUM

XAR $6.47B

ITA ✓$14.33B

Beta

XAR 1.01

ITA ✓0.75

Metrics last refreshed: 6/20/2026

Quick take

XAR vs ITA ETF Comparison: 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).

Live analysis · updated 6/20/2026

ITA holds the edge across 3 of 5 key metrics in this comparison. XAR has delivered stronger 1-year price return (+45.19% vs +34.36% for ITA).

Normalized 1Y performance

XAR

ITA

Recent returns

XAR

ITA

Who should consider this stock?

XAR may suit investors who:

→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

ITA may suit investors who:

→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

Performance & AI score

Metric	XAR	ITA
ETF score	66.0	62.0
Latest close	$284.29	$238.99
1M return	+9.57%	+9.54%
6M return	+24.30%	+16.85%
1Y return	+45.19%	+34.36%

$10,000 invested — hypothetical growth (dividends reinvested)

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	$14.57K (+45.7%) started 2025-06-18	$13.5K (+35.0%) started 2025-06-18
5Y ago	$23.07K (+130.7%) started 2021-06-18	$23.96K (+139.6%) started 2021-06-18
10Y ago	$58.89K (+488.9%) started 2016-06-20	$47.1K (+371.0%) started 2016-06-20

Hypothetical — past performance does not guarantee future results.

Fund characteristics

Metric	XAR	ITA
Expense ratio	0.35%	0.38%
Total assets (AUM)	$6.47B	$14.33B
Dividend yield	0.30%	0.46%
Trailing P/E	37.97	36.63
Beta	1.01	0.75
52-week change	45.19%	34.36%

Risk & fund metrics

Metric	XAR	ITA
1Y return	+45.19%	+34.36%
6M return	+24.30%	+16.85%
1M return	+9.57%	+9.54%
1Y Sharpe ratio	1.32	1.26
Beta	1.01	0.75
Dividend yield	0.30%	0.46%
5Y CAGR	+17.58%	+18.12%

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

XAR max drawdown17.21%

ITA max drawdown15.82%

XAR max wkly drop7.84%

ITA max wkly drop6.96%

5Y risk snapshot

XAR max drawdown32.40%

ITA max drawdown18.72%

XAR max wkly drop12.63%

ITA max wkly drop11.69%

10Y risk snapshot

XAR max drawdown46.37%

ITA max drawdown51.00%

XAR max wkly drop24.16%

ITA max wkly drop25.96%

Performance metrics by period

Period	Metric	XAR	ITA
1Y	Growth	+45.19%	+34.36%
	CAGR	+45.23%	+34.39%
	Sharpe ratio	1.32	1.26
	Max drawdown	17.21%	15.82%
	Max daily drop	4.87%	3.78%
	Max wkly drop	7.84%	6.96%
5Y	Growth	+124.71%	+129.92%
	CAGR	+17.58%	+18.12%
	Sharpe ratio	0.62	0.71
	Max drawdown	32.40%	18.72%
	Max daily drop	7.65%	8.44%
	Max wkly drop	12.63%	11.69%
10Y	Growth	+444.89%	+322.96%
	CAGR	+18.49%	+15.52%
	Sharpe ratio	0.63	0.55
	Max drawdown	46.37%	51.00%
	Max daily drop	13.31%	14.74%
	Max wkly drop	24.16%	25.96%

Fund overview

Category	XAR	ITA
Fund name	State Street SPDR S&P Aerospace & Defense ETF	iShares U.S. Aerospace & Defense ETF
Type	ETF	ETF
Expense ratio	0.35%	0.38%
Total assets (AUM)	$6.47B	$14.33B
Dividend yield	0.30%	0.46%

XAR strengths

→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

ITA strengths

→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

Risks to watch — XAR

→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

Risks to watch — ITA

→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

Frequently asked questions

XAR's equal-weight approach has outperformed ITA in some periods by avoiding Boeing's significant underperformance during manufacturing quality crises. If Boeing recovers, ITA would benefit more. For investors wanting diversified defense exposure without Boeing concentration risk, XAR is generally preferable. For investors wanting traditional defense prime concentration aligned with actual Pentagon spending, ITA is the more intuitive choice.

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+1.1%HOLD

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