Should You Invest in the Invesco Aerospace & Defense ETF (PPA)?
Sector ETF report for PPA
Designed to provide broad exposure to the Industrials - Aerospace & Defense segment of the equity market, the Invesco Aerospace & Defense ETF (PPA) is a passively managed exchange traded fund launched on 10/26/2005.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Aerospace & Defense is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
The fund is sponsored by Invesco. It has amassed assets over $703.73 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. PPA seeks to match the performance of the SPADE Defense Index before fees and expenses.
The SPADE Defense Index is comprised of approximately 50 U.S. companies whose shares are listed on a U.S. Exchange. These are companies that are principally engaged in the research, development, manufacture, operation and support of defense, military, homeland security and space operations.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.59%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 94% of the portfolio.
Looking at individual holdings, Lockheed Martin Corp (LMT) accounts for about 7.17% of total assets, followed by Raytheon Technologies Corp (RTX) and Boeing Co/the (BA).
The top 10 holdings account for about 52.82% of total assets under management.
Performance and Risk
So far this year, PPA has gained about 15.93%, and is up about 31.22% in the last one year (as of 11/08/2021). During this past 52-week period, the fund has traded between $61.33 and $77.50.
The ETF has a beta of 1.13 and standard deviation of 27.13% for the trailing three-year period, making it a medium risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
Invesco Aerospace & Defense ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PPA is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
SPDR S&P Aerospace & Defense ETF (XAR) tracks S&P Aerospace & Defense Select Industry Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. SPDR S&P Aerospace & Defense ETF has $1.25 billion in assets, iShares U.S. Aerospace & Defense ETF has $2.68 billion. XAR has an expense ratio of 0.35% and ITA charges 0.42%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Invesco Aerospace & Defense ETF (PPA): ETF Research Reports
The Boeing Company (BA): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports
SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports
Raytheon Technologies Corporation (RTX): Free Stock Analysis Report
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