XAR ETF Overview: Returns, Expense Ratio, Holdings, and Alternative ETFs — A Complete Guide
The State Street SPDR S&P Aerospace & Defense ETF (XAR) is a thematic exchange-traded fund that tracks a benchmark specialized in the aerospace and defense industry. It has drawn attention as an investment vehicle for defense-related stocks amid heightened geopolitical risk, and it also distributes dividends on a quarterly basis.
SubscribeWhat Is the State Street SPDR Aerospace & Defense ETF?
It is a sector-themed ETF based on the S&P Aerospace & Defense Select Industry Index, which tracks the performance of aerospace and defense companies. It broadly includes companies in defense, aircraft manufacturing, components, and space.
It is well suited for investors who want concentrated exposure to the aerospace and defense theme during periods of rising defense spending and heightened geopolitical variables.
The fund is managed by State Street as a passive (index-tracking) ETF.
How Does the State Street SPDR Aerospace & Defense ETF Work?
| Item | Details |
|---|---|
| Management Style | Passive (sampling) |
| Index Tracked | S&P Aerospace & Defense Select Industry Index |
| Rebalancing Frequency | Once per quarter |
| Dividend Frequency | Quarterly |
| Total Expense Ratio | 0.35% |
The fund invests in the index's aerospace and defense companies using a sampling approach, allocating the majority of its assets to those holdings. The structure broadly spans the industry value chain, from large defense contractors to aircraft component and maintenance companies.
- Pure, concentrated exposure to the aerospace and defense theme
- Near-equal-weight diversification that reduces concentration in any single large-cap name
State Street SPDR Aerospace & Defense ETF Size and Cost (AUM and Expense Ratio)
Assets under management (AUM) stand at $5.1B, and the total expense ratio is 0.35% per year.
Compared with peer industry ETFs ITA and PPA, the fund differs in expense level and weighting methodology, so a side-by-side review is warranted.
State Street SPDR Aerospace & Defense ETF Performance and Fund Flows
1-Year Price Performance
Dividend & Yield
52-Week Price RangeInvestor attention to defense-related stocks has persisted amid geopolitical variables and the broader trend of expanding defense budgets worldwide, while short-term performance has shown volatility tied to earnings releases and shifts in government budget policy.
Thematic inflows tend to rise during periods when defense and security issues come to the forefront, and the fund's flow profile is highly sensitive to related policy news and geopolitical events.
State Street SPDR Aerospace & Defense ETF: Strengths and Weaknesses
The fund's key strength is its pure exposure to the aerospace and defense theme, while its main weakness is elevated volatility from concentration in a narrow industry.
💪 Key Strengths
⚠️ Points to Watch
State Street SPDR Aerospace & Defense ETF Alternatives and Related Products
Peer funds tracking the same industry include ITA and PPA shown in the table, and these differ from XAR in expense level and weighting methodology. Investors seeking broader industrial-sector exposure may consider XLI as an alternative, those looking to extend their reach to the transportation industry may also review IYT, and those interested in a manufacturing renaissance theme may also evaluate AIRR as a related product.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 XLI | State Street Industrial Select Sector SPDR ETF | $169.71 | +1.4% | $31.2B | 0.08% | 1.11% | +9.4% |
 ITA | iShares U.S. Aerospace & Defense ETF | $214.68 | +2.4% | $12.1B | 0.37% | 0.26% | -0.5% |
 AIRR | First Trust RBA American Industrial Renaissance ETF | $99.56 | +1.0% | $8.4B | 0.69% | 0.1% | -0.4% |
 PPA | Invesco Aerospace & Defense ETF | $160.93 | +1.4% | $7.5B | 0.58% | 0.41% | +1.9% |
 IYT | iShares U.S. Transportation ETF | $83.08 | +1.8% | $2.0B | 0.37% | 0.91% | +14.8% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
 BWXT | BWX Technologies Inc | 0.03% | $130.47 | -0.2% | $12.0B | 33.8 | 0.84% |
 VSEC | VSE Corp | 0.03% | $160.21 | +8.4% | $4.5B | 59.0 | 0.25% |
 CW | Curtiss-Wright Corp | 0.03% | $484.09 | +1.7% | $17.9B | 33.3 | 0.21% |
| AXON | Axon Enterprise Inc | 0.03% | $425.43 | -0.6% | $34.6B | 176.2 | - |
| GD | General Dynamics Corp | 0.03% | $373.46 | +0.2% | $101.0B | 22.0 | 1.69% |
 CRS | Carpenter Technology Corp | 0.03% | $290.96 | +2.8% | $14.4B | 25.6 | 0.28% |
 HXL | Hexcel Corp | 0.03% | $81.22 | +4.3% | $6.1B | 36.4 | 0.89% |
| LHX | L3Harris Technologies Inc | 0.03% | $278.96 | +0.5% | $51.9B | 26.0 | 1.78% |
 FTAI | FTAI Aviation Ltd | 0.03% | $197.75 | +5.6% | $20.3B | 40.2 | 0.97% |
 SARO | StandardAero Inc | 0.03% | $25.13 | +7.5% | $8.3B | 25.9 | - |
Investor Checklist for the State Street SPDR Aerospace & Defense ETF
Below are key items to review before investing in XAR. Because the fund is concentrated in the specific aerospace and defense theme, unlike general industrial-sector ETFs, investors should carefully assess industry concentration risk and policy sensitivity in advance.
| Checklist Item | What to Verify | Current Status |
|---|---|---|
| 💵 Expense Ratio | Impact of cumulative costs over long-term holding periods | Comparison needed versus peer industry ETFs |
| 🏭 Industry Concentration | Whether exposure is concentrated in a single industry (aerospace and defense) | Thematic concentration structure maintained |
| 📰 Policy Sensitivity | Monitoring news flow on defense budgets and geopolitical events | Review required |
| 💰 Dividend Profile | Volatility range of quarterly distributions | Quarterly distributions maintained |
Thematic money can exit rapidly during periods of policy change regarding defense budgets or an easing of geopolitical variables, and air passenger demand and supply-chain issues can also act as volatility drivers across the industry.
This is a thematic ETF well suited for investors seeking concentrated exposure to the aerospace and defense industry, and portfolio-level position sizing is recommended in light of the industry's concentration risk.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
This article reflects information as of July 1, 2026.
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