The United States’ withdrawal from Afghanistan spurred some analysts to project a broader drawdown when it came to its foreign policy. However, its spending has thrown cold water on that suggestion. Joe Biden issued his budget proposal in April and requested $715 billion in defense spending. This represented a marginal increase from the previous year’s budget of $704 billion.
Congress is set to approve a budget of $740 billion, a nearly $40-billion increase over what Congress approved in Donald Trump’s final year in office.
This mammoth spending package for the Pentagon should keep investors laser-focused on the defense sector. Today, I want to look at an exchange-traded fund (ETF) that offers broad exposure to a space that has been very consistent over the past decade.
The iShares US Aerospace & Defense ETF (NYSE:ITA) seeks to track the investment results of an index made up of U.S. equities in the aerospace and defense sector. Shares of this ETF have climbed 16% in 2021 as of close on September 29. The ETF is up 33% from the previous year. This ETF has delivered annual returns between 20-35% for 2016, 2017, and 2019.
Investors should be familiar with the big names in this fund. The top holding is Raytheon Technologies (NYSE:RTX), a company that is the result of a merger between Raytheon and United Technologies. This made the company into an intelligence serves and defense manufacturing giant. The second-largest holding in this ETF is Boeing (NYSE:BA), which is the second-largest defense contractor on the planet.
