In times of market uncertainty, the go-to strategy is to get defensive. For traders looking to profit, that doesn’t mean adding safe haven assets, but considering the aerospace and defense (A&D) industry.
Specifically, short-term traders looking to optimize profitability may want to look at the Direxion Daily Aerospace & Defense Bull 3X Shares ETF (DFEN ). The fund is up over 40% year-to-date and has all the momentum heading into the summer months.
A new presidential administration entering 2025 may have given traders pause on the A&D sector. However, it doesn’t appear that President Trump’s administration will take the proverbial clippers and trim defense budgets anytime soon.
“Initial fears that the Trump administration would slash defense spending are fading, as early signs from the White House and Congress point to little appetite for cuts to the Pentagon budget,” MSN reported.
In other parts of the world, namely Europe, defense spending is getting a boost. Peace talks between Russia and Ukraine may be moving at a snail’s pace or not at all, forcing countries like Germany to keep opening its wallet to spend on defense.
Back in the U.S., this is translating into a higher S&P Aerospace & Defense index, which is up 17% for the year. That upside is spilling over into DFEN with its 3x leverage, producing its aforementioned 40% year-to-date gain.
Triple Leveraging Defense
Traders feeling bullish that A&D will continue its upward trajectory can double down on that bet. As specified earlier, in the case of DFEN, they can actually triple down, with its 300% leverage.
The basic fund description of DFEN says it tracks the Dow Jones U.S. Select Aerospace & Defense Index (DJSASDT). That index represents the performance of the A&D industry, comprising companies that are representative of that sector. For definitional purposes, aerospace companies include manufacturers, assemblers, and distributors of aircraft and aircraft parts. On the defense side, this includes companies that produce components and equipment for the defense industry, such as military aircraft, radar equipment, and weapons.
As of May 23, 2025, 40% of the fund’s allocation includes a who’s who in A&D: GE Aerospace, RTX Corporation (formerly Raytheon Technologies), and Boeing. Exposure to the latter presents an interesting play given the company’s recent court rulings. That said, DFEN is an ideal option that can cater to the 24-hour news cycle in the A&D industry. Rather than concentrate on one or a few stocks, traders can use DFEN to play the whole industry.
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