State Street SPDR S&P Aerospace & Defense ETF offers a lower expense ratio of 0.35% compared to the 0.75% fee for ARK Space & Defense Innovation ETF.
ARK Space & Defense Innovation ETF delivered higher trailing 1-year returns but carries a higher beta and deeper maximum drawdown.
State Street SPDR S&P Aerospace & Defense ETF utilizes an equal-weighted strategy across 50 holdings, while the ARK Space & Defense Innovation ETF is actively managed.
The ARK Space & Defense Innovation ETF (NYSEMKT:ARKX) offers active management in space technology, while State Street SPDR S&P Aerospace & Defense ETF (NYSEMKT:XAR) provides lower-cost, equal-weighted exposure to established industry leaders.
The aerospace and defense industry represents an intersection of government spending and technical innovation. Investors can choose between actively managed portfolios targeting space-specific tech or broader index-based funds. This comparison looks at how a high-conviction, space-focused strategy stacks up against a diversified, equal-weighted industry benchmark.
| Metric | ARKX | XAR |
|---|---|---|
| Issuer | ARK | SPDR |
| Share price | $32.07 (as of 2026-09-28) | $234.19 (as of 2026-09-28) |
| Expense ratio | 0.75% | 0.35% |
| 1-yr return (as of Sept. 28, 2026) | 15.1% | 1.8% |
| Dividend yield | None | 0.2% |
| Beta | 1.42 | 1.03 |
| AUM | $759.5M | $5.7B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the close of trading on Sept. 28, 2026.
For investors prioritizing cost efficiency, the State Street SPDR S&P Aerospace & Defense ETF is the more affordable choice with an expense ratio of 0.35%. This is significantly lower than the 0.75% fee charged by the ARK Space & Defense Innovation ETF, which reflects its active management style.
| Metric | ARKX | XAR |
|---|---|---|
| Max drawdown (4 yr) | (25.5%) | (21.0%) |
| Growth of $1,000 over 4 years (total return) | $2,568 | $2,584 |
The State Street SPDR S&P Aerospace & Defense ETF provides targeted access to the industry by mirroring the S&P Aerospace & Defense Select Industry Index. The fund utilizes a modified equal-weighting approach to balance exposure across 50 large, mid, and small-capitalization stocks. While it does not report a specific sector breakdown, its largest positions include Axon Enterprise Inc (NASDAQ:AXON) at 3.6%, VSE Corp (NASDAQ:VSEC) at 3.4%, and RTX Corp (NYSE:RTX) at 3.3%. It was launched in 2011.
The ARK Space & Defense Innovation ETF aims for capital appreciation by investing in domestic and international companies involved in orbital and suborbital innovation. The portfolio includes 45 holdings and leans into industrials (60%), technology (25%), and consumer cyclical (10%) sectors. Its largest positions include Space Exploration Technologies (SpaceX) (NASDAQ:SPCX) at 10.2%, L3harris Technologies (NYSE:LHX) at 6.8%, and Kratos Defense and Security Solutions Inc (NASDAQ:KTOS) at 6.03%. It was launched in 2021.
For more guidance on ETF investing, check out the full guide at this link.
Though both funds focus on aerospace and defense, they have some key differences that investors should weigh when making an investment.
The Ark fund, ARKX, is 89% in U.S. stocks and 11% in developed markets outside the country, providing modest international exposure. While aerospace has some notable large cap names, just 56% of the portfolio is in large cap stocks, with 21% in mid caps, and 23% in small cap stocks. That said, the fund is fairly top-heavy, with nearly 57% of its assets held in its top 10 holdings, led by more than 10% of the portfolio in SpaceX.
By comparison, the SPDR defense fund, XAR, has less than a third of its assets in its top 10. Just 18% of the ETF is held in large cap stocks, 35% in mid caps, and 47% in small cap stocks. That should provide XAR with faster growth as well as greater volatility. That makes its lower maximum drawdown compared to ARKX a surprise as a result. That suggests excellent management. It's all in U.S. stocks.
Still, performance is usually the best way to separate one fund from another. But in this pairing, each has periods that make it appear to be the better buy.
Year to date, XAR is down 11% while ARKX is down nearly 13%. Each have performed much better over the three year time frame, with ARKX returning an annualized 30.4% in that time frame compared to 28.8% for XAR.
XAR bests ARKX over the past five years, with 16.5% annualized returns versus 9% for ARKX. ARKX is too young to have a 10 year return, having been launched in late 2021. XAR has delivered 16.8% to its investors over the past 10 years.
With a lower expense ratio, less volatility and generally better returns that ARKX, XAR, the SPDR S&P Aerospace and Defense ETF is the better buy.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment, Axon Enterprise, Kratos Defense & Security Solutions, L3Harris Technologies, RTX, Rocket Lab, and Vse. The Motley Fool recommends Moog. The Motley Fool has a disclosure policy.