29 August 2024: Wealth Product Ideas
Investment Opportunity for Aerospace and Defense
Theme Overview:
- These ETFs focus on companies involved in the production, research, and development of defense equipment, aircraft, and related technologies.
- The theme is driven by global geopolitical tensions and increased defense spending worldwide.
Key Drivers:
a) Ongoing Conflicts:
- The Russia-Ukraine war continues with no end in sight.
- The Israel-Hamas conflict has been ongoing for over a year.
- Tensions between Israel and Iran are escalating, with potential for direct confrontation.
b) Increased Defense Spending:
- Russia’s defense spending is projected to grow by 29% in 2024, reaching $140 billion.
- Ukraine’s defense spending grew by 51% in 2023, reaching $64.8 billion.
- Many NATO countries are increasing their defense budgets to meet the 2% of GDP target.
c) Technological Advancements:
- Increased focus on cybersecurity, AI in defense, and advanced weapon systems.
- Growing demand for space-based defense capabilities.
Potential Risks:
- Peace negotiations or de-escalation of conflicts could reduce defense spending.
- Budget constraints in some countries might limit defense expenditure growth.
Fund Name (Ticker) | Invesco Aerospace & Defense ETF (PPA US) |
Description | The Invesco Aerospace & Defense ETF (Fund) is based on the SPADE™ Defense Index (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to identify a group of companies involved in the development, manufacturing, operations and support of US defense, homeland security and aerospace operations. The Fund and the Index are rebalanced and reconstituted quarterly. |
Asset Class | Equity |
30-Day Average Volume (as of 27 Aug) | 157,987 |
Net Assets of Fund (as of 27 Aug) | $3,753,200,000 |
12-Month Yield (as of 27 Aug) | 0.57% |
P/E Ratio (as of 30 Jun) | 28.03 |
P/B Ratio (as of 30 Jun) | 4.64 |
Expense Ratio (Annual) | 0.58% |
Top 10 Holdings
(as of 26 August 2024)
(Source: Bloomberg)
Fund Name (Ticker) | iShares U.S. Aerospace & Defense ETF (ITA US) |
Description | The iShares U.S. Aerospace & Defense ETF seeks to track the investment results of an index composed of U.S. equities in the aerospace and defense sector. |
Asset Class | Equity |
30-Day Average Volume (as of 26 Aug) | 335,909 |
Net Assets of Fund (as of 27 Aug) | $6,576,270,889 |
12-Month Yield (as of 31 Jul) | 0.8445% |
P/E Ratio (as of 26 Aug) | 32.44 |
P/B Ratio (as of 26 Aug) | 4.37 |
Management Fees (Annual) | 0.40% |
Top 10 Holdings
(as of 26 August 2024)
(Source: Bloomberg)
