NATO's European allies and Canada raised defense spending by approximately 20% in 2025. The SPDR S&P Aerospace & Defense ETF (XAR) offers an equal-weight approach, allocating capital evenly across 41 positions. This structure allows investors to gain exposure to various defense companies, including primes and mid-tier suppliers. The fund has performed well, returning nearly 79% over the past year and 439% over the last decade, driven by increased defense budgets and geopolitical tensions. The fund has a low expense ratio and minimal income, focusing on price appreciation for returns.
"The SPDR S&P Aerospace & Defense ETF (XAR) tracks the S&P Aerospace & Defense Select Industry Index using equal-weight methodology, meaning every one of its 41 positions receives roughly the same allocation. This design choice is the fund's defining feature, allowing broad coverage of defense primes, mid-tier suppliers, space launch companies, and drone manufacturers in a single vehicle."
"XAR's equal-weight structure has delivered impressive returns, with nearly 79% growth over the past year and about 439% over the last decade. This performance reflects the sector's long-term growth and the structural tailwind of rising global defense budgets, driven by surging defense budgets and renewed investor appetite for the sector."
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