🤝 BFF Take
XAR's Lower Cost and Equal Weighting Edge Out PPA for Most Investors
XAR charges 0.35% and equal-weights roughly 34 aerospace and defense companies. PPA charges 0.58% and holds 58 companies using a modified market-cap approach. Both provide broad defense exposure. The question is whether PPA's extra 0.23% per year in expenses is justified. PPA's 58-stock portfolio includes more mid-cap defense suppliers and service companies than XAR, and its modified market-cap weighting has historically produced strong risk-adjusted returns. However, XAR's equal-weight methodology naturally includes similar smaller-company exposure. The 0.23% annual cost gap compounds meaningfully over time. On a $100,000 investment over 20 years, that difference is approximately $50,000 in additional fees at equal returns. XAR delivers comparable defense exposure at a lower cost, making it the better default for long-term defense investors. PPA is worth considering for investors who prefer a longer track record (PPA launched in 2005 vs XAR's 2011) and Invesco's specific construction methodology.
📋 Quick Takeaways
💰XAR: 0.35% ER. PPA: 0.58% ER. That 0.23% gap compounds to ~$50K in extra fees on $100K over 20 years at equal returns.
📦PPA: 58 holdings, longer track record since 2005. XAR: 34 holdings, equal-weight, launched 2011.
🎯Lowest cost defense ETF with disciplined construction: XAR. Longest track record with broad exposure: PPA.
📊 Data-Based Take: XAR 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
XAR
SPDR S&P Aerospace & Defense ETF
PPA
Invesco Aerospace & Defense ETF
📋 XAR vs PPA — Key Facts Side by Side
| Metric |
XAR |
PPA |
| Fund Name |
SPDR S&P Aerospace & Defense ETF |
Invesco Aerospace & Defense ETF |
| Issuer |
State Street |
Invesco |
| Tracks Index |
S&P Aerospace & Defense Select Industry Index |
SPADE Defense Index |
| Expense Ratio |
0.35% ✓ |
0.58% |
| Cost per $10K/yr |
$35.00 |
$58.00 |
| AUM |
$6B |
$8B |
| Holdings |
34 |
58 |
| Inception |
2011 |
2005 |
| 1-Year Return |
+44.40% |
+32.40% |
| 3-Year Return |
+17.50% |
+16.80% |
| 5-Year Return |
+21.30% |
+20.50% |
| Avg Bid-Ask Spread |
0.04% |
0.04% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 XAR vs PPA — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy XAR or PPA?
Choose if...
XAR
- You want the lowest fees — saves ~$23/yr per $10K vs PPA
- You already use State Street and prefer staying within their fund family
Choose if...
PPA
- You want broader diversification (58 holdings vs 34)
- You already use Invesco and prefer staying within their fund family
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❓ XAR vs PPA — Frequently Asked Questions
What is the difference between XAR and PPA?
XAR tracks the S&P Aerospace & Defense Select Industry Index using equal weighting across roughly 34 companies at similar allocations, charging 0.35%. PPA tracks the SPADE Defense Index with 58 companies using a modified market-cap approach, charging 0.58%. PPA has a longer track record (launched 2005 vs XAR's 2011) and slightly broader holdings including more defense technology and support service companies.
Which defense ETF has the best track record?
PPA has the longest track record among the major defense ETFs, launching in 2005 and covering the Iraq War spending cycle, the post-2008 defense budget pressures, and the current rearmament phase. Over its full history, PPA has delivered strong risk-adjusted returns. XAR launched in 2011 and has delivered comparable performance, with slightly stronger returns in some periods due to its equal-weight construction capturing smaller defense company gains.
Are XAR and PPA good long-term investments?
Defense ETFs provide concentrated sector exposure and are subject to policy risk (changes in defense budgets), regulatory risk, and geopolitical cycle risk. They are not appropriate as a core portfolio holding but can serve as a tactical or long-term sector allocation. Both XAR and PPA hold diversified baskets of defense companies, reducing single-stock risk. Past performance does not guarantee future results.
Does XAR or PPA include international defense companies?
Neither XAR nor PPA includes international defense companies like BAE Systems, Rheinmetall, or Thales. Both funds hold US-listed companies only. Investors seeking exposure to the European defense spending surge specifically would need a broader fund or direct exposure to European-listed defense stocks, which are not available in XAR or PPA.
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.