Should You Invest in the State Street SPDR S&P Aerospace & Defense ETF (XAR)?

If you're interested in broad exposure to the Industrials - Aerospace & Defense segment of the equity market, look no further than the State Street SPDR S&P Aerospace & Defense ETF (XAR), a passively managed exchange traded fund launched on September 28, 2011.Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Aerospace & Defense is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.Index DetailsThe fund is sponsored by State Street Investment Management. It has amassed assets over $4.4 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. XAR seeks to match the performance of the S&P Aerospace & Defense Select Industry Index before fees and expenses.The S&P Aerospace & Defense Select Industry Index represents the aerospace & defense sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Aerospace & Defense Index is a modified equal weight index.CostsExpense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.It has a 12-month trailing dividend yield of 0.62%.Sector Exposure and Top HoldingsETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.This ETF has heaviest allocation in the Industrials sector -- about 100% of the portfolio.Looking at individual holdings, Ati Inc (ATI) accounts for about 4.32% of total assets, followed by Woodward Inc (WWD) and Carpenter Technology (CRS).The top 10 holdings account for about 38.14% of total assets under management.Performance and RiskThe ETF has added about 38.57% so far this year and was up about 35.75% in the last one year (as of 12/18/2025). In that past 52-week period, it has traded between $144.94 and $251.24.The ETF has a beta of 1.03 and standard deviation of 20.18% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.AlternativesState Street SPDR S&P Aerospace & Defense ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XAR is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.Invesco Aerospace & Defense ETF (PPA) tracks SPADE Defense Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. Invesco Aerospace & Defense ETF has $6.53 billion in assets, iShares U.S. Aerospace & Defense ETF has $12.08 billion. PPA has an expense ratio of 0.58%, and ITA charges 0.38%.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report State Street SPDR S&P Aerospace & Defense ETF (XAR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks