1 hour ago
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Rich Duprey
Tue, March 31, 2026 astatine 11:30 AM CDT 5 min read
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Rising Treasury yields to 4.44% are compressing valuations crossed the fund’s premium-priced mega-cap contractors, with PPA trading astatine a 33 guardant P/E that assumes sustained defence spending contempt the headwind of higher discount rates connected long-duration authorities contracts.
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The Invesco Aerospace & Defense ETF (NYSEARCA:PPA) is built connected a straightforward premise: wars and geopolitical hostility are bully for defence contractors. With the U.S. successful an progressive struggle against Iran, that premise seems much applicable than ever. Yet the money has shed 11.55% successful the past period and trades astir $160, good beneath its aboriginal March terms of $181. The spread betwixt the geopolitical communicative and the fund's existent show is simply a communicative worthy understanding.
Invesco Aerospace & Defense ETF launched successful October 2005 and holds astir $8.2 cardinal successful assets. Its portfolio is 88.4% concentrated successful industrials, giving investors nonstop vulnerability to the biggest names successful U.S. defense. The apical 5 positions are Lockheed Martin (NYSE:LMT), RTX (NYSE:RTX), Boeing (NYSE:BA), GE Aerospace (NYSE:GE), and Northrop Grumman (NYSE:NOC). The occupation is that not each of them are behaving similar wartime winners.
Boeing carries a 7.78% value successful the money arsenic its third-largest holding. Year to date, Boeing shares are down 12.85% and person fallen 16.84% implicit the past month. The Iran War has analyzable its concern alternatively than boosting it: the struggle has disrupted proviso chains, delayed constituent deliveries to Middle Eastern airlines, and driven up input costs done the closure of the Strait of Hormuz.
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Lockheed Martin and RTX person held up better. Lockheed is up 24.39% twelvemonth to day contempt slipping 8.58% implicit the past month. RTX is astir level for the twelvemonth astatine 2.38% twelvemonth to date, though it has pulled backmost 7.63% recently. The divergence wrong the fund's ain apical holdings illustrates wherefore a handbasket of defence names does not ever behave arsenic a unified geopolitical trade.
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