Lower Fees, Higher Growth: Why Cost-Conscious Aerospace Investors May Favor XAR Over PPA
PPA delivered $2,143 on a $1,000 investment over five years, but carries a higher expense ratio. XAR's lower costs and modified equal-weight approach appeal to different investor priorities.
Invesco Aerospace & Defense ETF (PPA) and State Street SPDR S&P Aerospace & Defense ETF (XAR) both provide concentrated exposure to the defense and aerospace sectors, but they employ different weighting methodologies and have varying expense structures. XAR's modified equal-weight index aims to limit individual stock concentration, while PPA's weighting is more diverse and has been in operation longer.
Beta measures the fund's price volatility relative to the S&P 500, with XAR showing lower volatility. On a year-to-date basis, XAR has outperformed PPA, generating a 16.2% total return with a 16.2% CAGR, compared to PPA's 12.6% total return and 12.6% CAGR. XAR also offers a slightly higher dividend yield, at 0.4% compared to PPA's 0.2%.
However, XAR's lower annual fee of 0.35% compared to PPA's 0.58% may appeal to cost-conscious investors. In summary, XAR presents a more affordable and efficient option for investors seeking exposure to the aerospace industry, with superior performance, lower fees, and a modified equal-weight strategy that reduces the impact of larger holdings.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
