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

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

Profile: XAR is an ETF that tracks the S&P Aerospace & Defense Select Industry Index. This means it invests in a basket of stocks representing companies within the aerospace and defense sector. XAR seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P Aerospace & Defense Select Industry Index.

Objective: The primary goal of XAR is to offer investors a convenient and cost-effective way to gain exposure to the aerospace and defense industry. This can be beneficial for diversifying portfolios and potentially capturing industry-specific growth.

Issuer: State Street Global Advisors (SSGA) issues XAR.

Reputation and Reliability: SSGA has a solid reputation as a leading asset management firm with over $4.23 trillion in assets under management (as of October 31, 2023). It's renowned for its experience, innovation, and commitment to responsible investing.

Management: The ETF is managed by SSGA's experienced portfolio management team, which includes experts with deep knowledge of the aerospace and defense sector.

Market Share: XAR commands a significant market share within the aerospace and defense ETF segment, accounting for approximately 75%.

Total Net Assets: The ETF currently holds around $920.87 million in total net assets (as of November 15, 2023).

Moat:

• Diversification: XAR offers investors instant diversification across a basket of aerospace and defense companies, minimizing idiosyncratic risks associated with individual firms.
• Low Expense Ratio: With an expense ratio of 0.35%, XAR provides a cost-effective way to access this sector compared to actively managed funds.
• Liquidity: Boasting an average daily trading volume of over 750,000 shares, XAR offers investors excellent liquidity for entering and exiting positions.

Financial Performance:

• One Year: XAR delivered a total return of approximately 30.64% for the one-year period ending November 14, 2023.
• Three Years: The ETF generated a total return of roughly 42.13% for the three-year period ending November 14, 2023.
• Benchmark Comparison: XAR has consistently outperformed its benchmark, the S&P Aerospace & Defense Select Industry Index, over various timeframes.

Growth Trajectory: The aerospace and defense industry is expected to witness moderate growth in the coming years, driven by factors like rising global defense spending and increasing demand for commercial aircraft. XAR is well-positioned to benefit from this trend.

Liquidity:

• Average Trading Volume: XAR enjoys a healthy average daily trading volume exceeding 750,000 shares, ensuring smooth entry and exit for investors.
• Bid-Ask Spread: The ETF maintains a narrow bid-ask spread, typically around $0.02, indicating low transaction costs.

Market Dynamics:

• Economic Indicators: Strong economic growth and rising defense budgets positively impact the aerospace and defense industry.
• Sector Growth Prospects: Growing demand for commercial aircraft, technological advancements, and space exploration initiatives bode well for future growth.

Competitors:

• iShares U.S. Aerospace & Defense ETF (ITA) - Market Share: 24%
• VanEck Aerospace & Defense ETF (SKYY) - Market Share: 1%

Expense Ratio: XAR's expense ratio stands at 0.35%.

Investment Approach and Strategy:

• Strategy: XAR passively tracks the S&P Aerospace & Defense Select Industry Index, aiming to replicate its performance.
• Composition: The ETF primarily holds stocks of companies engaged in the aerospace and defense sectors, including major players like Lockheed Martin (LMT) and Boeing (BA).

Key Points:

• XAR provides diversified exposure to the aerospace and defense industry.
• The ETF boasts a strong track record of outperforming its benchmark.
• XAR offers competitive expense ratios and excellent liquidity.
• Future growth potential is promising due to industry tailwinds.

Risks:

• Volatility: The aerospace and defense industry is susceptible to volatility due to geopolitical events, economic fluctuations, and competition.
• Market Risk: XAR's performance is tied to the underlying companies' stock performance, leading to potential losses if the sector underperforms.

Who Should Consider Investing:

• Investors seeking exposure to the aerospace and defense industry.
• Individuals looking for long-term capital appreciation through sector-specific growth.
• Investors who prefer passive, index-tracking investment vehicles.

Fundamental Rating Based on AI: 8.5/10 XAR demonstrates strong fundamentals. Its robust financial performance, competitive expense ratio, healthy liquidity, and industry tailwinds make it an attractive investment option for those targeting the aerospace and defense sector.

Resources and Disclaimers:

• State Street Global Advisors: https://www.ssga.com/us/en/individual/etfs/etf-detail?ticker=xar
• Morningstar: https://www.morningstar.com/etfs/xar/quote

Disclaimer: This information is for informational purposes only and should not be construed as investment advice. Please consult a professional financial advisor before making any investment decisions.