The aerospace and defense sector is taking investors deeper into space, and exchange-traded funds want in on it.
VettaFi’s Cinthia Murphy told CNBC’s “ETF Edge” this week that there are now more ETFs that deal more directly with the space theme – and lists them Obtain a space ETF (UFO). and Global X Defense Tech ETF (SHLD) as examples.
“You have the cybersecurity element: satellites, communications, navigation. The defense theme is actually a very colorful topic these days. It has a lot of interesting names,” said the company’s research director. “It’s really not just about that Lockheed Martin and some of the traditional names you find in ITA [iShares US Aerospace & Defense ETF].”
As of Thursday’s close, the Procure Space ETF is up nearly 19% since the Iran war began on Feb. 28, while the Global X Defense Tech ETF is down 8%.
Meanwhile, the more traditional iShares US Aerospace & Defense ETF is down 10% over the same period. The website lists the top holdings GE Aerospace, RTX And Boeing.
Murphy expects investor interest in aerospace and defense stocks to remain long after the Iran war is resolved.
“Any time there is geopolitical tension, an issue like this comes into the public eye,” Murphy said. “But it’s another big growth area because there’s so much new technology coming onto the market and so much investment going into this area. Many governments are committing to investing a lot more in the next five to 10 years.”
Murphy expects the historic interest in SpaceX’s IPO, largely expected in June, to fuel interest in the space even further.
“One of the things we’ve talked about the most this year is space exploration and space investment as we get close to SpaceX going public,” Murphy added.
SS&C technologies“Paul Baiocchi is also bullish on aerospace and defense names, predicting that a huge increase in defense budgets around the world will deliver solid returns for the group.
“All of these things converge on the same limited, scarce resources,” the financial technology firm’s head of fund sales and strategy said in the same interview. “Short term, medium term [and] long term, raw material allocation, energy infrastructure [and] The entire electrification infrastructure will benefit from huge investments from both the public and private sectors.”
He also sees artificial intelligence as playing a key role.
“The bottleneck for AI might be chips, but it’s also energy and transmission and the raw materials that go into construction,” Baiocchi said. “If you look at defense, that is also part of the limitation, namely the availability of the rare earths.”
Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.