Sometimes you stumble across a sector of the market that is just in the right place at the right time. That may very well be the sentiment driving the remarkable price action in aerospace and defense stocks in the current geopolitical environment.
These companies are the driving forces behind military and commercial aircraft, defense equipment, and other services designed to support the armed forces.
Exchange-traded funds (ETFs) that track defense stocks tend to be more aggressive and potentially more volatile than the broader market based on their concentrated portfolios. Investors that are considering these tools should opt to take smaller, tactical positions compared to a traditional core holding with wider diversification and minimal expenses.
It also goes without saying that politics and global military trends are likely to have the biggest impact on the direction of these ETFs over the next several years. But for right now, all of the macroeconomic winds are on these funds’ side.
