The State Street SPDR S&P Aerospace & Defense ETF (XAR +0.73%) offers a lower-cost, equal-weighted approach to the sector, while the First Trust Indxx Aerospace & Defense ETF (MISL +0.19%) provides a more concentrated, lower-volatility portfolio.
Investors seeking defense exposure often choose between market-cap-weighted strategies and more diversified alternatives. While both funds target the aerospace and defense industry, they differ significantly in their cost structures, weighting methodologies, and historical volatility profiles, which could influence their suitability for different portfolio roles.
Snapshot (cost & size)
| Metric | MISL | XAR |
|---|---|---|
| Issuer | First Trust | SPDR |
| Share price | $42.83 (as of 2026-07-30) | $262.83 (as of 2026-07-30) |
| Expense ratio | 0.6% | 0.35% |
| 1-yr return (as of July 30, 2026) | 9.6% | 20.6% |
| Dividend yield | 0.3% | 0.3% |
| Beta | 0.70 | 1.01 |
| AUM | $719.0M | $5.8B |
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.
With an expense ratio of 0.35%, the SPDR fund is more affordable than the 0.6% charged by the First Trust fund. Both ETFs offer a matching 0.3% trailing dividend yield, providing a small income component alongside sector growth.
Performance & risk comparison
| Metric | MISL | XAR |
|---|---|---|
| Max drawdown (3 yr) | (17.9%) | (19.7%) |
| Growth of $1,000 over 3 years (total return) | $1,846 | $2,135 |
First Trust Exchange-Traded Fund – First Trust Indxx Aerospace & Defense ETF
Today’s Change
(0.19%) $0.08
Current Price
$43.11
Key Data Points
AUM
$727M
Dividend Yield
0.32%
Expense Ratio
0.60%
Top Holdings
RTX
9.08%
GE
8.29%
BA
8.04%
What’s inside
State Street SPDR S&P Aerospace & Defense ETF (XAR +0.73%) tracks a modified equal-weighted index, providing exposure to 47 holdings across the industrials (96%), basic materials (3%), and technology (1%) sectors. Its largest positions include RTX (RTX +0.67%) at 3.44%, Axon Enterprise (AXON +4.09%) at 3.37%, and StandardAero (SARO +1.64%) at 3.29%. The fund was launched in 2011. It has paid $0.81 per share over the trailing 12 months, which on its recent ~$262.83 share price works out to a 0.3% yield. This equal-weighting approach ensures that mid-cap and small-cap players influence performance as much as industry giants.
First Trust Indxx Aerospace & Defense ETF (MISL +0.19%) is more concentrated with 49 holdings, primarily in industrials (80%) and technology (13%). Its top holdings include RTX (RTX +0.67%) at 9.21%, GE Aerospace (GE +0.69%) at 8.18%, and Palantir Technologies (PLTR +0.77%) at 8.13%. This fund was launched in 2022. It has paid $0.14 per share over the trailing 12 months, which on its recent ~$42.83 share price works out to a 0.3% yield. By weighting by market capitalization, it may appeal to those seeking heavier emphasis on the largest defense contractors and high-growth software firms.
For more guidance on ETF investing, check out the full guide at this link.
SPDR Series Trust – State Street SPDR S&P Aerospace & Defense ETF
Today’s Change
(0.73%) $1.94
Current Price
$266.80
Key Data Points
AUM
$5.9B
Dividend Yield
0.30%
Expense Ratio
0.35%
Top Holdings
RTX
3.36%
AXON
3.27%
SARO
3.26%
What this means for investors
Global defense spending is at generational highs, and both XAR and MISL are positioned to benefit. But they define the aerospace and defense sector in very different ways and have delivered very different outcomes as a result.
XAR’s equal-weighted structure is the key to understanding its recent outperformance. Rather than letting the largest companies dominate, it gives smaller defense contractors the same portfolio influence as industry giants, distributing risk across a broader range of companies.
MISL blends traditional defense industrials with technology companies like Palantir and Rocket Lab. That tech tilt represents a conviction that modern warfare is increasingly fought with software and data rather than hardware alone. It has produced a smoother ride than XAR, albeit with lower recent returns.
Paying nearly seven times more in annual fees for MISL requires you to believe that its tech-infused approach and lower volatility are worth the substantial cost difference. For most long-term investors who want broad, low-cost aerospace and defense exposure, XAR’s stronger track record and dramatically lower fee make it the more practical choice.