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Looking for broad exposure to the Industrials - Aerospace & Defense segment of the equity market? You should consider the iShares U.S. Aerospace & Defense ETF (ITA), a passively managed exchange traded fund launched on 05/01/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 15, placing it in bottom 6%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $3.71 billion, making it one of the largest ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. ITA seeks to match the performance of the Dow Jones U.S. Select Aerospace & Defense Index before fees and expenses.
The Dow Jones U.S. Select Aerospace & Defense Index measures the performance of the aerospace and defense sector of the U.S. equity market.
Costs
When 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 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.78%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 99.50% of the portfolio.
Looking at individual holdings, Raytheon Technologies Corp (RTX) accounts for about 22.65% of total assets, followed by Lockheed Martin Corp (LMT) and Boeing (BA).
The top 10 holdings account for about 75.12% of total assets under management.
Performance and Risk
The ETF has lost about -3.50% so far this year and is down about -3.05% in the last one year (as of 09/16/2022). In that past 52-week period, it has traded between $93.66 and $112.95.
The ETF has a beta of 1.03 and standard deviation of 32.28% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.