As military budgets grow, so do aerospace and defense inventories

RRussia’s invasion of Ukraine led to the prospect of increased military spending, which led to a rally in aerospace and defense stocks. European countries have strengthened their military capabilities and increased their defense spending in response to the Russian-Ukrainian war. Countries also supplying defense stocks promise to offer tougher surface-to-air missiles to Ukrainian forces to fend off Russia.

Therefore, investors are turning to ETFs that track the aerospace and defense industry, including the ARK Space Exploration ETF (ARKX).

Launched last March, ARKX is an actively managed ETF that seeks exposure to sectors such as orbital and suborbital aerospace, defense, electrical engineering, machinery and professional services.

One of ARKX’s top holdings as of March 4 was Kratos Defense & Security Solutions Inc. (Nasdaq: KTOS), a developer of directed energy weapons, unmanned systems, satellite communications, cybersecurity/warfare, of microwave electronics, missiles based in San Diego. defence, training and combat systems. Kratos was weighted at 8.5%, according to ARKX’s latest disclosure.

A MarketWatch report names KTOS as one of 10 aerospace and defense stocks with a majority of “buy” or equivalent ratings that analysts expect to rise the most over the next year.

ARKX owns 35 shares ranging in weight from 0.98% to 9.51%. The fund’s top five holdings together account for nearly 35% of the fund’s weighting. ARKX charges 0.75% per year, or $75 on a $10,000 investment.

After less than a year on the market, ARKX has brought in nearly $470 million in assets under management, making it one of the best performing thematic ETFs launched in the last year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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