U.S. President Donald Trump began his Asia trip this weekend with the intention to strengthen ties with partners in the region.
Trump flew into the Yokata Air Base near Tokyo to address American military personnel when he arrived in Japan. In the speech Trump praised “the most fearsome fighting force in the history of the world”. Trump has sworn that the era of “strategic patience” vis-à-vis North Korea is over, raising the very real possibility that this trip will serve to secure alliances as the potential for war remains.
In mid-September, the Senate overwhelmingly approved of a $700 billion military budget, the final vote tally was 89 to 8. Political tensions in Washington have heightened dramatically since the election of Trump, but increased military spending remains a consensus among the two parties.
The SPDR S&P Aerospace & Defense ETF (NYSE:XAR) gives investors the opportunity to own some of the top defense industry companies in the United States. Shares of the Aerospace & Defense ETF have increased 29.5% in 2017 and 43% year over year.
Some of its top holdings include Orbital ATK Inc. (NYSE:OA), a Virginia-based company that manufactures tactical missiles, defense electronics, as well as medium to large-calibre ammunition, and the California-based conglomerate Teledyne Technologies Incorporated (NYSE:TDY).
Investors should feel secure owning an ETF that will benefit from the bipartisan push for defense spending. One hopes that cooler heads prevail when it pertains to the U.S.-North Korea crisis, but in a geopolitical environment that appears to be regressing back into a multipolar world order it is wise to prepare for more global strife.