Most people would agree that military life isn’t an easy one, both while serving and once someone becomes a veteran. But there are a few companies that are trying to make our service members lives easier both while they are serving in the armed forces and after they hang up their uniforms.
Obviously, while someone is a member of any of the branches of our military, they are using tools, weapons, vehicles, and technology built by an aerospace and defense company which makes their lives easier and ideally their jobs safer. Let’s take a look at a few Exchange Traded Funds that operate in the development and manufacturing of these products.
One of the larger aerospace and defense ETFs, based on assets under management is the iShares U.S. Aerospace & Defense ETF (ITA). The fund carries a 0.43% expense ratio, it holds 35 stocks, with the top ten representing 75.44% of the assets, (largely due to Boeing Company (BA) and United Technology (UTX) representing 22.97% and 15.52% of the fund respectively). ITA also has a nice 1.09% dividend yield, a weighted average market cap of $80.96 billion, and average trading volume of $30.15 million. The fund has also been in existence since 2006, and its ten-year average annual performance is a positive 19.44%, making this one of the better performing ETFs over the last decade. Year-to-date the fund is up 24.25%.
Another solid option is the SPDR S&P Aerospace & Defense ETF (XAR). This fund has $1.5 billion in assets, an expense ratio of 0.35%, dividend yield of 0.87%, 31 holdings, with the top ten representing 40% of assets. Year-to-date this fund is up a healthy 29.89% and has returned an average of 16.8% over the last five years but has not been in existence long enough to have a ten-year track record.
Another option would be the Direxion Daily Aerospace & Defense Bull 3X ETF (DFEN). This is a three-times leveraged ETF that is betting on the Aerospace and Defense industry to continue moving higher. The fund has an expense ratio of 0.98% and should not be owned for extended periods or by the faint of heart due to its high amount of leverage. Year-to-date the fund is up 78.38%, but that gain can change very quickly.
Once someone retires from the military after no matter how many years of service, most likely they will be looking for employment. While some can step into government jobs, the vast majority go into the private sector. The Pacer Military Times Best Employers ETF (VETS) and the InsightShares Patriotic Employers ETF (HONR) are currently two different Exchange Traded Funds that focus on companies that veteran and military-friendly employment opportunities.
What these two funds mainly do, is buy companies that have favorable hiring practice for veterans or who encourage veteran workplace participation. VETS base their picks on companies selected by the Military Times ‘Best for Vets’ annual employer rankings while HONR bases their picks on the Military Friendly Employers list designed by Victory Media. HONR has a 0.65% expense ratio while VETS boast a 0.60% fee. VETS have $2.88 million in assets under management while HONR controls $1.28 million.
VETS has just 44 stocks with the top ten making up 26.13%, and HONR has 92 stocks with its top ten representing only 11.3%. Both funds are very worthy causes and have rewarded shareholders up to this point in 2019 with VETS' 22.24% return year-to-date and HONR’s 19.76% return. These compare to the SPDR S&P 500 ETF Trust (SPY) return of 17.42% year-to-date.
Regardless of whether you invest in one of the pure-play veteran ETFs like VETS or HONR, or you go the aerospace and defense route, supporting the troops is an important thing, and because of these ETFs, we can do it with our personal portfolio’s.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not own shares of any equity mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
