What are PPA and XAR and how do they work?

PPA and XAR are exchange-traded funds (ETFs) that invest in the aerospace and defence sector. PPA, the PowerShares Aerospace & Defense ETF, and XAR, the S&P Aerospace Defense SPDR ETF, aim to track the performance of companies involved in this industry. Investors buy shares of the ETF, which represent a diversified basket of underlying stocks. The value of the ETF fluctuates based on the performance of these holdings.

What is an expense ratio and why is it important?

An expense ratio is the annual fee that ETFs charge to investors, covering management and operational costs. For PPA, the expense ratio is 0.58%, while for XAR, it is 0.35%. This difference of 0.23 percentage points may seem small, but over time, it can impact returns. Lower expense ratios mean more of your money stays invested, potentially leading to higher long-term growth.

What is dividend yield and how does it apply to ETFs?

Dividend yield is the annual dividend payments divided by the ETF’s share price. PPA has a dividend yield of 0.41%, whereas XAR’s is 0.17%. A higher yield can provide more income to investors, but it doesn't always reflect overall performance. ETFs distribute dividends from their holdings, impacting total return. Understanding yields helps in assessing income potential relative to sector trends.

How do PPA and XAR differ in terms of top holdings?

PPA and XAR have overlapping but distinct top holdings. Shared holdings include Lockheed Martin (LMT), General Dynamics (GD), Northrop Grumman (NOC), and Honeywell (HONA). However, PPA also features RTX and Boeing prominently, while XAR includes AeroVironment (AVAV) and Rocket Lab (RKLB). This difference reflects the unique selection criteria and diversification approaches of each fund, leading to varied sector exposures.

What are the key differences in expense ratios between PPA and XAR?

PPA’s expense ratio of 0.58% is higher compared to XAR’s 0.35%. This means that PPA costs more in fees, potentially affecting long-term returns. The 0.23 percentage point difference indicates that, for every $1,000 invested, PPA charges approximately $2.30 more annually. Investors should consider these fees when evaluating net returns and overall investment efficiency, especially in similar sector ETFs.

How do the funds track their exposures?

PPA and XAR aim to replicate the performance of the aerospace and defence sector. While PPA tracks broader holdings with a focus on large-cap companies like RTX and Boeing, XAR diversifies more evenly with mid and small-cap firms such as AeroVironment and Rocket Lab. This approach results in different risk and return profiles, affecting how each fund responds to sector dynamics.

How do PPA and XAR differ in terms of assets under management?

PPA has accumulated $7.6 billion in net assets since its inception in October 2005, while XAR has $6.1 billion since September 2011. The greater scale of PPA may reflect its longer market presence. Investors often consider fund size as an indicator of liquidity and stability, though both funds offer substantial assets in the aerospace and defence sector.

Why is it important to know the inception dates of PPA and XAR?

The inception date is the day the fund started trading. PPA began on October 26, 2005, while XAR started on September 28, 2011. Knowing these dates helps assess the fund’s track record and experience in various market conditions. PPA, with a longer history, might have different performance characteristics compared to the newer XAR, influencing risk tolerance considerations.

What should investors know about sector weights?

Detailed sector weights for PPA and XAR are currently not available. Understanding sector weights is crucial for assessing diversification and concentration risk. Without these details, investors must rely on top holdings for an initial sense of the fund’s composition. This limitation underscores the importance of comprehensive research before making investment decisions.

What should I look for when comparing ETFs like PPA and XAR?

When comparing ETFs, consider expense ratios, dividend yields, top holdings, and fund size. Each factor influences potential returns and risk profiles. Additionally, examine tracking methods and sector exposure. This comprehensive approach helps in understanding how the funds align with your financial goals and risk tolerance, ensuring informed investment choices.

PPA vs XAR

Two funds, one decision: we compare cost, performance and what each ETF actually holds in October 2026.

This page compares PPA (PowerShares Aerospace & Defense ETF) and XAR (S&P Aerospace Defense SPDR ETF). Both focus on the industrials sector, with similar top holdings like LMT, GD, NOC, and HONA. We examine their expense ratios, net assets, dividend yields, and tracking methods to help you understand their differences. Educational content, not financial advice.

This page compares PPA (PowerShares Aerospace & Defense ETF) and XAR (S&P Aerospace Defense SPDR ETF). Both focus on the industrials sector, with similar top holdings like LMT, GD, NOC, and HONA. We e...

Fund Snapshot

Key Fund Metrics

PPA

Metric

XAR

0.58%

Expense Ratio

0.35%

0.41%

Dividend Yield

0.17%

$7.62B

Net Assets

$6.10B

63

Holdings

52

Oct 26, 2005

Inception Date

Sep 28, 2011

–

Index Tracked

–

Industrials

Fund Category

Industrials

XAR costs about $23.00 less per year for every $10,000 invested.

Shared Top Holdings

Holding	PPA	XAR
LMTLockheed Martin Corporation	6.69%	2.92%
GDGeneral Dynamics Corporation	5.03%	2.87%
NOCNorthrop Grumman Corporation	5.01%	2.92%
HONAHoneywell Aerospace Inc.	3.61%	3.19%

Discover More Comparisons

PPA vs SHLD

Compare PPA and SHLD on fees, holdings, and dividends. PPA: 0.58%, $7.6bn. SHLD: 0.50%, $7.1bn. Both hold RTX, LMT, and GD for defence exposure.

ITA vs XAR

ITA vs XAR: both hold 52 aerospace and defense stocks. ITA puts 48% in GE, RTX and Boeing for 0.37% a year; XAR spreads weight evenly for 0.35%. Compare both.

ARKX vs XAR

Compare ARKX vs XAR ETFs on fees, holdings and dividends. Review 0.75% vs 0.35% expenses, yields, and how each tracks space and defence sectors.

Investment Analysis

PPA

Pros

The fund has accumulated net assets of $7.6 billion since its inception in October 2005.
Its top holdings include well-known aerospace and defence companies such as RTX and BA.
An expense ratio of 0.58% reflects a traditional sector ETF approach with broad holdings.

Considerations

The fund's dividend yield is low at 0.41%, which may not appeal to income-focused investors.
Its top holdings show significant concentration in large-cap firms like RTX and BA.
The sector weight details are not available, limiting transparency into diversification beyond the top ten holdings.

XAR

Pros

With $6.1 billion in net assets since inception in September 2011, it demonstrates solid scale.
Top holdings include a mix of smaller and mid-cap firms such as AVAV and RKLB.
An expense ratio of 0.35% is lower than many peer sector ETFs, enhancing cost efficiency.

Considerations

The fund's dividend yield is notably low at 0.17%, potentially reducing income appeal.
Top holdings exhibit a broad range of firms, but the lack of large-cap dominance may increase volatility.
Details on sector weights are not available, making it difficult to assess overall diversification.

Related Market Insights

Saudi Arms Deal Puts Defence Giants Back in the Spotlight

Explore the investment impact of the $5bn Saudi Arabia JDAM-ER arms deal. Analyse prime defense contractors like Lockheed Martin and RTX with Nemo's thematic guides.