Defense Sector Surge Powers Aerospace ETF Growth

The iShares U.S. Aerospace & Defense ETF stands at the intersection of two powerful market forces: unprecedented global military expenditures and a robust commercial aviation recovery. This exchange-traded fund provides consolidated exposure to 39 leading U.S. companies operating within this dynamic sector.

Civilian aviation demonstrates strong momentum as major carriers expand their fleets. In late September 2025, Turkish Airlines, WestJet, and Korean Air each placed substantial new aircraft orders with Boeing. Despite this positive demand signal, the industry faces operational headwinds. Persistent supply chain constraints affecting engine manufacturing and cabin equipment installations threaten to create delivery delays that could temper the sector's growth trajectory.

Geopolitical Dynamics Fuel Defense Expansion

Global defense spending reached a record $2.7 trillion during 2024, with further increases anticipated following NATO's July 2025 summit where member nations committed to additional budget enhancements. Ongoing conflicts across Eastern Europe and the Middle East continue to drive nations to replenish and modernize their military arsenals.

Should investors sell immediately? Or is it worth buying iShares U.S. Aerospace & Defense ETF?

The United States Department of Defense has emphasized these priorities through its $849.8 billion budget request for fiscal year 2025. Strategic focus areas include unmanned systems, space economy infrastructure, and missile technology development. Simultaneously, the Pentagon is implementing procurement process reforms aimed at increasing efficiency, reducing costs, and accelerating innovation—changes that present both structural challenges for established defense contractors and new opportunities for agile technology firms.

Strategic Portfolio Concentration

Rather than pursuing broad diversification, the ITA ETF maintains a focused approach with just 39 holdings. The fund's top ten positions command significant weighting, providing investors with targeted exposure to the sector's most influential and profitable enterprises. This concentrated structure ensures that portfolio performance closely tracks the industry's leading companies.

The fundamental restructuring of global security frameworks, combined with sustained aviation sector momentum, establishes conditions conducive to extended growth. The critical question remains whether corporate performance can align with these elevated market expectations.