Should You Invest in the Invesco Aerospace & Defense ETF (PPA)?

If you're interested in broad exposure to the Industrials - Aerospace & Defense segment of the equity market, look no further than the Invesco Aerospace & Defense ETF (PPA), a passively managed exchange traded fund launched on 10/26/2005.While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.Additionally, sector ETFs offer convenient ways 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 3, placing it in top 19%.Index DetailsThe fund is sponsored by Invesco. It has amassed assets over $4.55 billion, making it one of the largest 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.CostsWhen considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.It has a 12-month trailing dividend yield of 0.33%.Sector Exposure and Top HoldingsETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.This ETF has heaviest allocation in the Industrials sector--about 91.20% of the portfolio.Looking at individual holdings, Rtx Corp (RTX) accounts for about 6.93% of total assets, followed by Boeing Co/the (BA) and General Electric Co (GE).The top 10 holdings account for about 54.93% of total assets under management.Performance and RiskYear-to-date, the Invesco Aerospace & Defense ETF has gained about 26.52% so far, and was up about 29.61% over the last 12 months (as of 12/23/2024). PPA has traded between $89.11 and $124.50 in this past 52-week period.The ETF has a beta of 0.93 and standard deviation of 17.44% for the trailing three-year period, making it a medium risk choice in the space. With about 56 holdings, it effectively diversifies company-specific risk.AlternativesInvesco 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 sufficient 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 $2.64 billion in assets, iShares U.S. Aerospace & Defense ETF has $6.24 billion. XAR has an expense ratio of 0.35% and ITA charges 0.40%.Bottom LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco Aerospace & Defense ETF (PPA): ETF Research Reports The Boeing Company (BA): Free Stock Analysis Report GE Aerospace (GE): Free Stock Analysis Report iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports RTX Corporation (RTX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks