XAR vs ITA: Equal Weight vs Market Cap in Defense
XAR weights every defense company roughly equally. ITA concentrates in the largest prime contractors. In 2025, prime contractors dominated returns and ITA edged ahead. But XAR's equal weighting has outperformed over longer time horizons.
XAR (SPDR S&P Aerospace & Defense ETF) and ITA (iShares US Aerospace & Defense) both provide exposure to US defense companies, but their construction differs significantly. XAR uses an equal-weight approach within the S&P Aerospace & Defense Select Industry Index, giving similar weight to a mid-cap defense electronics firm as to Lockheed Martin. ITA market-cap weights its holdings, concentrating in the largest prime contractors. XAR costs 0.35% vs ITA's 0.40%. In 2025, ITA's prime-contractor concentration worked in its favor as the largest defense companies benefited disproportionately from increased Pentagon contracts. Over longer periods, XAR's equal-weight methodology has outperformed because it forces exposure to the full defense supply chain and rebalances into smaller outperformers. XAR is the better long-term choice for defense exposure; ITA is more appropriate for investors who specifically want maximum prime contractor concentration.
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.
📋 XAR vs ITA — Key Facts Side by Side
| Metric | XAR | ITA |
|---|---|---|
| Fund Name | State Street SPDR S&P Aerospace & Defense ETF | iShares U.S. Aerospace & Defense ETF |
| Issuer | State Street | iShares |
| Tracks Index | S&P Aerospace & Defense Select Industry Index | Dow Jones US Select Aerospace & Defense |
| Expense Ratio | 0.35% ✓ | 0.40% |
| Cost per $10K/yr | $35.00 | $40.00 |
| AUM | $6.5B | $14.4B |
| Holdings | 34 | 35 |
| Inception | 2011 | 2006 |
| 1-Year Return | +19.45% | +20.71% |
| 3-Year Return | +30.74% | +27.65% |
| 5-Year Return | +16.78% | +18.33% |
| Dividend Yield | 0.28% | 0.44% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.04% | 0.03% |
Expense ratio, AUM, and returns updated Jul 17, 2026 from ETF BFF database. Returns are annualised. Not investment advice.
📊 XAR vs ITA — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- want the lowest fees: saves ~$5/yr per $10K vs ITA
- already use State Street and prefer staying within one fund family
- already use iShares and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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❓ XAR vs ITA — Frequently Asked Questions
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