🤝 BFF Take
ITA for Size and Liquidity. PPA for Better Risk-Adjusted Returns.
ITA (iShares US Aerospace & Defense) is the largest defense ETF at about $12B AUM, holding 35 US aerospace and defense companies with 0.40% expenses. PPA (Invesco Aerospace & Defense) holds 58 companies at 0.58%, using a modified market-cap approach that reduces the concentration in prime contractors like Lockheed Martin and Raytheon. PPA's broader exposure to mid-cap defense suppliers has historically delivered better Sharpe ratios than ITA's more top-heavy portfolio. In 2025-2026, with NATO members accelerating spending toward higher GDP targets and European defense budgets expanding dramatically, both funds have posted strong returns. PPA's returns have held up slightly better because mid-cap defense companies, including suppliers, munitions makers, and electronics firms, have benefited from the spending surge along with the prime contractors. For investors making a long-term defense allocation, PPA's more balanced construction justifies its higher fee.
📋 Quick Takeaways
💼ITA: $12B AUM, 35 holdings, 0.40% ER. PPA: $8B AUM, 58 holdings, 0.58% ER.
📊PPA's modified market-cap weighting reduces prime contractor concentration and has historically produced better Sharpe ratios.
🎯Maximum defense liquidity and scale: ITA. Better risk-adjusted exposure across the full defense supply chain: PPA.
📊 Data-Based Take: PPA has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
ITA
iShares U.S. Aerospace & Defense ETF
PPA
Invesco Aerospace & Defense ETF
📋 ITA vs PPA — Key Facts Side by Side
| Metric |
ITA |
PPA |
| Fund Name |
iShares U.S. Aerospace & Defense ETF |
Invesco Aerospace & Defense ETF |
| Issuer |
iShares |
Invesco |
| Tracks Index |
Dow Jones US Select Aerospace & Defense |
SPADE Defense Index |
| Expense Ratio |
0.40% ✓ |
0.58% |
| Cost per $10K/yr |
$40.00 |
$58.00 |
| AUM |
$12B |
$8B |
| Holdings |
35 |
58 |
| Inception |
2006 |
2005 |
| 1-Year Return |
+48.90% |
+32.40% |
| 3-Year Return |
+18.20% |
+16.80% |
| 5-Year Return |
+22.10% |
+20.50% |
| Avg Bid-Ask Spread |
0.03% |
0.04% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 ITA vs PPA — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy ITA or PPA?
Choose if...
ITA
- You want the lowest fees — saves ~$18/yr per $10K vs PPA
- You already use iShares and prefer staying within their fund family
Choose if...
PPA
- You want broader diversification (58 holdings vs 35)
- You already use Invesco and prefer staying within their fund family
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❓ ITA vs PPA — Frequently Asked Questions
What is the difference between ITA and PPA?
ITA tracks the Dow Jones US Select Aerospace & Defense Index with 35 holdings, weighting heavily toward the largest prime contractors. PPA tracks the SPADE Defense Index with 58 holdings, using a modified market-cap approach that provides more equal exposure across the defense supply chain, including smaller defense electronics, munitions, and support service companies. PPA's broader construction has historically produced better risk-adjusted returns; ITA's larger size ($12B vs $8B) means tighter bid-ask spreads.
Are defense ETFs a good investment in 2026?
Defense ETFs have been among the strongest performers in 2025-2026. NATO members are actively increasing spending toward higher GDP targets, European governments have authorized historic defense budget increases, and geopolitical tensions continue to sustain elevated procurement spending. Both ITA and PPA are up sharply. Whether that momentum continues depends on geopolitical conditions, but the structural shift toward higher defense spending in Europe and Asia looks durable. Past performance does not guarantee future results.
What companies are in ITA and PPA?
ITA's top holdings typically include Lockheed Martin, Raytheon Technologies, L3Harris, Northrop Grumman, and Textron: the prime US defense contractors. PPA holds a similar set of large contractors but adds more mid-cap defense technology and electronics companies. Both funds exclude international defense companies like BAE Systems and Rheinmetall, focusing on US-listed aerospace and defense stocks.
How does XAR compare to ITA and PPA?
XAR (SPDR S&P Aerospace & Defense ETF) is the lowest-cost option at 0.35% and uses an equal-weight approach within the S&P Aerospace & Defense Select Industry Index, providing the most exposure to smaller defense companies relative to the prime contractors. In 2025, XAR delivered strong returns as the equal-weight approach captured gains from mid and small-cap defense suppliers. See the XAR vs ITA and XAR vs PPA comparison pages for a direct breakdown.
New to ETF investing? See answers to the most common ETF questions →
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.