The SPDR S&P Aerospace & Defense ETF (XAR) is an exchange-traded fund designed to track the performance of U.S. companies operating in the aerospace and defense industries. The ETF is managed by State Street Global Advisors (SPDR) and trades under the ticker XAR on the NYSE Arca.

Classified as a sector equity ETF, the fund invests in companies involved in aircraft manufacturing, military equipment, defense systems, aerospace components, and technologies supporting national security. Its strategy provides exposure to an industry driven by both commercial aviation demand and government defense spending.

The ETF follows a passive management approach and seeks to replicate the performance of the S&P Aerospace & Defense Select Industry Index, a benchmark composed of U.S. aerospace and defense companies. 

Unlike some competing funds, the index uses a modified weighting methodology that reduces concentration in the largest companies, resulting in more balanced exposure across its holdings.

Diversification and sector exposure

XAR provides exposure primarily associated with:

• Aerospace.

• Defense.

• Industrials.

• Military equipment.

• Aviation.

• National security.

• Defense technology.

• U.S. companies.

The portfolio includes aircraft manufacturers, defense contractors, engineering firms, aerospace component suppliers, and companies serving both commercial aviation and defense markets.

The ETF's performance reflects the U.S. aerospace and defense industry and is influenced by both commercial aviation demand and government defense spending.

Structure and costs

XAR shares trade on the secondary market on the NYSE Arca during regular trading hours. Share creation and redemption occur through authorized participants, a mechanism intended to help align the ETF's market price with its net asset value (NAV).

The fund charges a management fee as outlined in its prospectus and does not apply a performance fee. Dividends received from portfolio holdings may be distributed periodically to shareholders according to the fund's distribution policy.

Because it concentrates its investments in a single industry, the ETF may experience greater volatility than broad-market equity funds.

History and evolution of the ETF

The SPDR S&P Aerospace & Defense ETF was launched in 2011 to provide targeted exposure to the U.S. aerospace and defense industry through a diversified portfolio of companies.

Since inception, the fund has tracked multiple industry cycles, including growth in commercial aviation demand, changes in defense spending, and advances in aerospace technologies.

In recent years, rising defense expenditures, military modernization programs, expansion of the space industry, and geopolitical tensions have continued to shape the performance of the companies represented in the ETF's portfolio.

Additional Information

SPDR S&P Aerospace & Defense ETF (United States) is an exchange-traded fund (ETF), with assets under management totaling $5.76 billion.

Over the past 12 months, SPDR S&P Aerospace & Defense ETF recorded a return of 6.21%, with its price trading between $218.75 and $296.73 during the same period.

The ETF is traded under the ticker XAR.