PPA ETF Nears Record $152 as Defense Spending Soars Past $2.5 Trillion

NYSEARCA:PPA ETF Extends Rally as Defense Spending Surges Globally

The Invesco Aerospace & Defense ETF (NYSEARCA:PPA) has climbed to $151.48 and touched its 52-week peak of $152.07, marking a 32.24% year-to-date return that outpaces its sector benchmark’s 19.7% gain. With $6.24 billion in net assets, an average daily volume of more than 200,000 shares, and a price-to-earnings ratio of 32.4x, the ETF has become a primary vehicle for investors seeking exposure to aerospace and defense growth.

Massive Increases in NATO and U.S. Military Budgets Power the Sector

Defense budgets across the globe expanded to $2.5 trillion in 2024, or 1.9% of global GDP, reflecting a sharp rise from 1.8% in 2023. Within NATO, 23 of 27 EU members have pledged spending of at least 3.5% of GDP on defense, with additional resources directed to infrastructure and missile systems. The United States has added $150 billion in Pentagon allocations for 2026, pushing total military budgets toward $1 trillion. The “Golden Dome” missile defense initiative alone is projected to cost $175 billion in the next three years and over $831 billion across two decades, directly feeding into the order books of the ETF’s core holdings.

Underlying Holdings Show Expanding Backlogs and Contract Wins

Boeing (BA), representing 8.44% of the fund, maintains a $522 billion commercial order pipeline and $74 billion in defense backlog, strengthened by a $2.8 billion U.S. Space Force satellite contract and new fighter jet programs. General Electric (GE), weighted 8.22%, secured a $5 billion Air Force contract and holds a $175 billion backlog, with $20 billion tied to defense engines and systems. RTX Corporation (RTX), accounting for 7.73% of PPA, reported $21.6 billion in quarterly revenues and expanded its defense backlog to $236 billion, including a $3.79 billion Army missile defense contract. Lockheed Martin (LMT), with 6.77% allocation, retains a $166.5 billion backlog despite quarterly profit volatility caused by one-off charges. Northrop Grumman (NOC) and General Dynamics (GD) further extend stability with multibillion-dollar Navy and Army contracts, while L3Harris (LHX) added $8 billion in new Q2 orders, lifting its backlog to $35.4 billion.

Diversification Shields PPA Against Single-Stock Risks

PPA carries 58 holdings, with its top ten names representing 56.7% of assets, a structure that significantly lowers concentration risk compared with peers like iShares U.S. Aerospace & Defense ETF (ITA). During downturns such as the pandemic aviation collapse, PPA’s diversification insulated it from the steep declines seen in more concentrated funds. The weighting strategy, spread across industry leaders such as Northrop Grumman, Honeywell, and L3Harris, allows PPA to capture growth while avoiding overexposure to any single company.

Performance Streak Continues With Consistent Outperformance

Over the past twelve months, PPA has returned 34.54%, compared with just 21.37% for its category. Over three years, it has averaged 29.96% annual returns, nearly double the 16.84% industry average, and over ten years, it compounded at 16.95% against peers at 12.35%. Even with a modest 0.44% dividend yield and a higher 0.58% expense ratio, investors have rewarded its track record of delivering better risk-adjusted performance than competitors such as XAR and ITA.

Technical Landscape Reinforces Strength Near Record Highs

The ETF has held its 50-day moving average as consistent support, with sideways trading since July allowing the RSI to reset from overbought levels. Price action between $148 support and $152 resistance suggests strong demand absorption at current levels. With geopolitical tensions in Europe, the Middle East, and Asia still unresolved, capital continues to flow into defense equities, supporting sustained upward momentum for PPA.

Strategic Outlook on NYSEARCA:PPA ETF

The NYSEARCA:PPA ETF combines the sector’s largest defense contractors, multi-decade government contracts, and diversified exposure across aerospace and security technologies. With global defense budgets at historic highs, a 32% YTD gain, and backlogs across its holdings surpassing $1 trillion combined, PPA is positioned as a strong vehicle for capturing the defense supercycle. At current trading levels around $151–152, the ETF remains a Buy for investors seeking reliable exposure to defense sector expansion.

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