What Is XAR? SPDR S&P Aerospace & Defense ETF

XAR is the SPDR S&P Aerospace & Defense ETF, an equal-weighted fund that holds roughly 35-40 US aerospace and defense companies. It tracks the S&P Aerospace & Defense Select Industry Index, a modified equal-weighted index spanning large, mid, and small caps in the industry. At a 0.35% expense ratio, it is a focused sector fund rather than a broad-market core, built to give balanced access across the whole aerospace and defense supply chain.

The defining feature of XAR is its equal weighting. Rather than letting the biggest primes dominate, it spreads weight evenly, so a mid-cap supplier or a defense-tech name carries about as much weight as Lockheed Martin or RTX, with the largest positions sitting at roughly 3-4% each. That makes it a single-ticker way to own the breadth of the defense industry without concentrating the position in a handful of mega-cap contractors, which is the main thing that separates it from a cap-weighted fund like ITA.

Approximate weights as of early 2026; refresh quarterly from State Street SPDR's fund page. Each ticker links to its individual stock guide in Walnut.

Because XAR is equal-weighted, its top holdings look unusually flat: AeroVironment, Howmet Aerospace, GE Aerospace, Axon Enterprise, Lockheed Martin, RTX, Northrop Grumman, Boeing, General Dynamics, and Heico all sit at roughly 3-4% each. See the top-10 table above for current weights. No single name dominates the way the largest primes do in a cap-weighted defense fund, and smaller defense-tech and supplier names appear near the top alongside the giants.

Below the top 10 sit roughly 25-30 more holdings spanning primes, component and parts suppliers, electronics, and emerging defense-tech firms working on areas like drones, hypersonics, and naval systems. That equal weighting is the entire reason to choose XAR over a cap-weighted fund: it gives the smaller, faster-growing suppliers and innovators real weight in the portfolio rather than burying them under the mega-cap primes. The trade-off is more mid-cap exposure and more volatility than a fund concentrated in the largest, more stable contractors.

All three cover the US aerospace and defense industry, but they are built differently. ITA (iShares U.S. Aerospace & Defense ETF) is market-cap weighted, so it concentrates in the largest primes like RTX, Boeing, and Lockheed Martin and is more top-heavy. PPA (Invesco Aerospace & Defense ETF) is also cap-weighted but broader, including some non-defense aerospace and adjacent technology names. XAR (0.35%) is the equal-weighted one, spreading weight evenly across roughly 35-40 names.

The practical choice is concentration versus balance. ITA gives you a cap-weighted bet that rises and falls with the largest defense contractors. PPA is a broader cap-weighted basket that reaches into adjacent aerospace and tech. XAR is the equal-weight expression: more mid-cap and supplier exposure, less dominated by any single prime, and generally more volatile as a result. XAR tends to fit investors who want broad, balanced defense exposure rather than a fund anchored to the mega-cap primes.

XAR's total return comes almost entirely from price appreciation across its holdings, since the dividend yield is only around 0.4%. Because it is equal-weighted and tilted toward mid-cap suppliers and defense-tech names, its returns can diverge from a cap-weighted defense fund: it tends to outperform when smaller defense names lead and lag when the mega-cap primes carry the industry. It is more volatile than a broad-market fund like VOO and often more volatile than cap-weighted ITA.

That is the central thing to understand before buying: XAR is a focused, equal-weighted bet on the breadth of the aerospace and defense industry, not a diversified core holding. Holding it means accepting sector concentration, sensitivity to defense budgets and procurement cycles, and a mid-cap tilt, in exchange for balanced exposure across primes, suppliers, and innovators. XAR is best judged over full cycles and against defense and industrial benchmarks rather than against the broad S&P 500.

XAR is a common pick for investors who want focused aerospace and defense exposure with balanced weighting: one purchase covers the breadth of the industry, and the equal weighting gives suppliers and smaller defense-tech names real representation rather than burying them under the largest primes. It suits people who have conviction in the defense theme but do not want their position dominated by two or three mega-cap contractors.

Where it falls short: XAR is a single-industry fund, so it carries sector concentration and swings with defense budgets and procurement cycles, and its equal weighting and mid-cap tilt make it more volatile than a cap-weighted fund like ITA. It is a satellite tilt rather than a core holding. Walnut isn't an investment adviser and this isn't a recommendation, but in conversation Walnut's AI can show you how much aerospace and defense exposure you already carry and where XAR fits as a sector tilt.

XAR trades on NYSE Arca during US market hours (9:30am to 4:00pm ET) and is available commission-free at every major broker, including Robinhood, Fidelity, Schwab, Vanguard, Public, M1, and Webull. Fractional shares are supported at most modern brokers, which also lets the dividends reinvest automatically as fractional shares (DRIP), useful for a long-term sector position.

Walnut doesn't replace your broker, it sits on top of it. Connect any major broker and Walnut adds an AI layer that helps you build baskets around XAR, track how your holdings are doing against your targets, and rebalance when your allocation drifts.

XAR is the entire US aerospace and defense industry held at roughly equal weight, so mid-cap suppliers and defense-tech names carry as much weight as the mega-cap primes. It fits as a focused, more volatile sector tilt for investors who want broad, balanced defense exposure rather than a cap-weighted fund like ITA that concentrates in the largest primes.

Whether XAR is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is XAR a buy?

XAR yields ~0.4% as of early 2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see XAR dividend: yield and schedule.