State Street’s SPDR S&P Kensho Future Security ETF tracks an index of U.S. companies involved in aerospace and defense innovations, a twist on the traditional defense ETF.
FITE looks for companies that are engaged in other defense-related businesses, including those in cybersecurity and advanced border security, and apportions its portfolio across a series of sub-sectors, including drones, robotics, wearable tech, space tech, and virtual reality. As a result, FITE’s portfolio isn’t dominated by aerospace and defense stocks like Northrop Grumman, Lockheed Martin and Raytheon, though those companies are in there. Instead, FITE has sizable slices of its portfolio invested in information technology, software and communications.
Perhaps that’s why FITE charges a bit of a premium over traditional defense ETFs, including State Street’s own SPDR S&P Aerospace and Defense ETF (XAR) and BlackRock’s iShares U.S. Aerospace & Defense ETF (ITA).
But FITE still isn’t outrageously priced — it isn’t even the most expensive defense ETF on the market — making FITE one option investors who want a more nuanced approach to investing in national defense.