SPDR® S&P Aerospace & Defense ETF (XAR)XAR

ETF SPDR® S&P Aerospace & Defense ETF (XAR)

Profile

XAR is an exchange-traded fund (ETF) that tracks the S&P Aerospace & Defense Select Industry Index. This index comprises companies primarily engaged in the aerospace and defense industries. The ETF offers investors diversified exposure to this sector with 32 holdings. Its primary focus is on capital appreciation through long-term investment in a basket of securities.

Objective

XAR's primary objective is to provide investment results that, before expenses, generally correspond to the total return performance of the S&P Aerospace & Defense Select Industry Index.

Issuer

XAR is issued by State Street Global Advisors, a leading asset management firm with a global presence.

Reputation and Reliability: State Street is a reputable and reliable issuer with a long history of managing ETFs. It is known for its commitment to quality and transparency.

Management: The ETF is managed by a team of experienced professionals with expertise in the aerospace and defense industry.

Market Share

XAR is the largest ETF in the aerospace and defense sector, with a market share of approximately 80%.

Total Net Assets

As of November 2023, XAR’s total net assets are approximately $2.5 billion.

Moat

XAR boasts several competitive advantages:

• First-mover advantage: It was the first ETF to focus on the aerospace and defense sector.
• Liquidity: Its large size and high trading volume make it a highly liquid ETF.
• Low expense ratio: XAR has a relatively low expense ratio of 0.35%, making it an attractive option for cost-conscious investors.

Financial Performance

Historical Performance: XAR has delivered strong historical performance. Over the past 5 years, the ETF has generated an annualized return of approximately 15%.

Benchmark Comparison: XAR has outperformed its benchmark, the S&P 500 Index, over the past 5 years.

Growth Trajectory

The aerospace and defense industry is expected to experience continued growth in the coming years, driven by factors such as increased defense spending and technological advancements. This bodes well for XAR’s future growth potential.

Liquidity

Average Trading Volume: XAR has an average daily trading volume of over 1 million shares, making it a highly liquid ETF.

Bid-Ask Spread: The bid-ask spread is typically tight, indicating low trading costs.

Market Dynamics

The aerospace and defense sector is influenced by various factors, including global economic conditions, defense spending, and technological advancements. Investors should carefully consider these factors before investing in XAR.

Competitors

• iShares U.S. Aerospace & Defense ETF (ITA): Market share - 15%
• VanEck Aerospace & Defense ETF (PPA): Market share - 5%

Expense Ratio

XAR has an expense ratio of 0.35%.

Investment Approach and Strategy

Strategy: XAR passively tracks the S&P Aerospace & Defense Select Industry Index.

Composition: The ETF primarily holds large-cap stocks of companies in the aerospace and defense industries, such as Boeing, Lockheed Martin, and Raytheon Technologies.

Key Points

• Diversification across the aerospace and defense sector
• Potential for capital appreciation
• Strong historical performance
• Low expense ratio
• High liquidity

Risks

• Market Risk: The ETF is subject to market fluctuations and could experience significant losses due to factors such as economic downturns and geopolitical events.
• Volatility: The aerospace and defense sector can be volatile, potentially leading to sharp price swings in the ETF.
• Concentration Risk: XAR has a relatively concentrated portfolio, which means that a few companies have a significant impact on its performance.

Who Should Consider Investing

XAR is suitable for investors:

• Seeking long-term exposure to the aerospace and defense sector.
• Comfortable with moderate volatility.
• Committed to a buy-and-hold investment strategy.

Fundamental Rating Based on AI

Based on an AI-powered analysis of XAR’s fundamentals, it receives a rating of 8.5 out of 10. This rating takes into account the ETF's strong historical performance, low expense ratio, high liquidity, and favorable growth prospects for the aerospace and defense industry. The analysis highlights XAR's strengths as a competitive option within the sector.

Resources and Disclaimers

This analysis is based on information gathered from the following sources:

• State Street Global Advisors
• ETF.com
• Morningstar

Disclaimer: This information is for educational purposes only and should not be considered investment advice. It is essential to conduct your own research and consult with a financial advisor before making any investment decisions.