iShares Aerospace ETF Outperforms Jets ETF With Lower Costs
Key Points
The iShares U.S. Aerospace & Defense ETF offers a lower expense ratio and a more stable volatility profile than U.S. Global Jets ETF.
Performance over the last five years shows iShares U.S. Aerospace & Defense ETF producing significantly higher total returns for investors.
The U.S. Global Jets ETF concentrates heavily on airline operators, while iShares U.S. Aerospace & Defense ETF focuses on domestic defense contractors and aerospace manufacturers.
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Investing in the aviation space can mean two very different things: betting on the cyclical travel demand of commercial airlines or the contract-driven stability of defense firms. While both the iShares U.S. Aerospace & Defense ETF (NYSEMKT:ITA) and the U.S. Global Jets ETF (NYSEMKT:JETS) occupy the industrial sector, their risk profiles and underlying economic drivers diverge significantly for investors interested in the skies.
Snapshot (cost & size)
| Metric | JETS | ITA |
|---|---|---|
| Issuer | US Global | iShares |
| Expense ratio | 0.6% | 0.38% |
| 1-yr return (as of 5/27/26) | 28.7% | 32.2% |
| Dividend yield | 0.8% | 0.5% |
| Beta | 1.18 | 1.02 |
| AUM | $865.2 million | $14.3 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is the more affordable choice with a 0.38% expense ratio compared to 0.6% for JETS. While JETS offers a slightly higher distribution yield of 0.8%, the iShares fund has paid out more cash on a per-share basis over the trailing 12 months.
Performance & risk comparison
| Metric | JETS | ITA |
|---|---|---|
| Max drawdown (5 yr) | (55.6%) | (21.7%) |
| Growth of $1,000 over 5 years (total return) | $1,099 | $2,172 |
What's inside
The iShares U.S. Aerospace & Defense ETF focuses on domestic aerospace and defense companies, with 100% of the portfolio in the industrial sector. Its largest positions include GE Aerospace at 20%, RTX Corp. at 14.3%, and Boeing at 9.5%. The fund holds 44 securities, was launched in 2006, and has paid $1.07 per share over the trailing 12 months.
The U.S. Global Jets ETF concentrates on the global airline industry, with approximately 89% in industrials and 9% in consumer cyclicals. Top holdings include Delta Air Lines at 12%, United Airlines at 11.05%, and American Airlines at 10.6%. It manages 49 holdings, was launched in 2015, and has a trailing-12-month dividend of $0.23 per share.
For more guidance on ETF investing, check out the full guide at this link.
What it means for investors
Investors looking skyward for portfolio ideas will find many options. Two big industries they may be drawn to are aerospace and defense, and commercial aviation. Among other factors, choosing between the ITA and JETS ETFs will probably come down to your conviction in these two different sectors of the market.
The iShares U.S. Aerospace & Defense ETF gives you exposure to domestic aerospace and defense companies, a popular investment trend given recent geopolitical events and technological themes. The ETF also offers lower costs and historically lower volatility, as well as a larger one-year return and a significantly more robust overall portfolio. Companies in this fund are typically backed by large contracts, which means their financial results may be more transparent and predictable for investors.
The U.S. Global Jets ETF provides concentrated, high-beta exposure to airline operators and manufacturers. These companies may be more prone to cyclicality as travel demand ebbs and flows both seasonally and with respect to consumer confidence. Income investors may be drawn to its higher yield, but the fund also has a higher expense ratio at 0.6%.
The best play for diversification in the aviation space may be to hold both funds, or to select a handful of high-conviction stocks from each and monitor their progress individually.
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Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, GE Aerospace, and RTX. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
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