ITA vs PPA

Key Takeaways

• Both funds are passively managed aerospace and defense ETFs, but they track different indexes: ITA follows the Dow Jones U.S. Select Aerospace & Defense Index, while PPA follows the SPADE Defense Index.
• ITA is cheaper (0.37% expense ratio) and more concentrated in sector leaders, whereas PPA (0.58%) is more diversified, with roughly 68 holdings and a modest information technology tilt.
• ITA skews almost entirely to industrials, while PPA adds exposure to technology and communication services names such as PLTR and RKLB.
• PPA's broader, more balanced portfolio has historically shown lower volatility and beta, while ITA's concentration amplifies exposure to mega-cap defense primes.
• Tickeron AI Verdict: ITA — the AI favors ITA for its lower cost, deeper liquidity, and concentrated exposure to sector-momentum leaders.

Introduction

For investors seeking exposure to U.S. defense and aerospace, ITA and PPA are two of the most prominent and directly comparable exchange-traded funds available. They do not merely offer alternative takes on the same theme — they compete head-to-head for the same investor dollar, differing mainly in index construction, diversification, and cost. Comparing their structural profiles, sector exposure, and relative positioning is timely, as elevated global defense budgets, supply-chain rebuilding, and a shifting commercial aerospace cycle continue to shape fund performance.

iShares U.S. Aerospace & Defense ETF (ITA) Overview

ITA is a passively managed, market-cap-weighted fund that seeks to track the Dow Jones U.S. Select Aerospace & Defense Index, a benchmark of U.S. aerospace and defense equities defined by S&P Dow Jones Indices. The fund typically holds around 50 to 54 names and carries a net expense ratio of 0.37%, among the lowest in its category.

The portfolio is heavily concentrated in the sector's largest companies. Its top holdings include GE Aerospace (roughly 20% of assets), RTX Corporation, BA Boeing, GD General Dynamics, LMT Lockheed Martin, NOC Northrop Grumman, HWM Howmet Aerospace, TDG TransDigm, and LHX L3Harris Technologies. Sector allocation is effectively 100% industrials, reflecting the fund's pure-play focus. As a non-diversified fund, single-stock concentration — particularly in GE Aerospace and RTX — is a defining structural feature.

Invesco Aerospace & Defense ETF (PPA) Overview

PPA is a passively managed index fund that seeks to track the SPADE Defense Index, a market-cap-weighted benchmark of U.S.-listed companies involved in defense, military, homeland security, and government space operations. It holds roughly 68 names and charges a net expense ratio of 0.58%. The index is rebalanced and reconstituted quarterly.

PPA shares many mega-cap anchors with ITA — including RTX, LMT Lockheed Martin, BA Boeing, and GE Aerospace — but spreads weight more evenly and reaches further into the supply chain with holdings such as PH Parker-Hannifin and HONA Honeywell Aerospace. Its sector allocation is approximately 92% industrials, with a meaningful information technology sleeve (around 7%) plus a small communication services position. This broader, less concentrated profile lowers single-name risk relative to ITA.

Industry and Thematic Backdrop

Both ETFs operate in an aerospace and defense environment shaped by structurally rising government budgets, sustained geopolitical tensions, and efforts to replenish munitions and modernize fleets. At the same time, the commercial aerospace recovery has been uneven, as production-rate ramp-ups for narrowbody aircraft and lingering supply-chain constraints weigh on airframe and engine manufacturers. Capital flows into defense names have been supported by multi-year procurement visibility, while regulatory scrutiny, budget cycles, and high valuations present ongoing risks. Interest-rate expectations also matter, given the capital-intensive, long-cycle nature of defense contracts and commercial aircraft programs.

Performance and Positioning Comparison

In recent market cycles, ITA's concentrated exposure to top momentum leaders has made it more sensitive to moves in its largest holdings, while PPA's broader, lower-beta portfolio has tended to exhibit lower volatility and smaller drawdowns. When mega-cap primes and aerospace suppliers lead the sector rotation, ITA's heavier top-tier concentration can amplify upside; when leadership broadens into mid-caps or technology-adjacent defense names, PPA's wider footprint provides a relative advantage. Cost also compounds over time: ITA's 0.37% fee versus PPA's 0.58% gives the iShares fund a modest structural tailwind for long-term holders.

AI Screener

Tickeron's AI Screener is an AI-powered stock and ETF discovery tool that helps traders and investors filter the market based on technical patterns, fundamentals, trends, volatility, and AI-driven signals. Users can scan thousands of stocks and ETFs using customizable filters such as industry, market capitalization, technical indicators, price patterns, and performance metrics. The screener is designed to help identify trade ideas, trending stocks, breakout candidates, and market opportunities more efficiently than manual screening. Explore the AI Screener to refine your sector research and surface actionable opportunities.

Tickeron AI Verdict

Based on observable factors such as cost efficiency, liquidity, trend consistency, and exposure to sector-momentum leaders, Tickeron's AI would currently favor ITA. Its lower expense ratio, deeper trading liquidity, and concentrated positioning in high-momentum primes such as GE Aerospace and RTX give it a structural edge in trend-following environments. PPA's broader diversification and lower volatility remain attractive for risk-conscious investors, but on a relative-positioning basis, the AI would lean toward ITA for its combination of scale, cost advantage, and concentrated sector leadership.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

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