7 Best Defense ETFs to Buy for 2026

Conflicts in the Middle East, Ukraine and other parts of the world have brought a lot of uncertainty to financial markets. Despite all of the uncertainty, there is one undeniable fact that investors should keep in mind: Countries will invest more money into their defense systems and militaries as tensions grow. House of Representatives recently passed a $1.15 trillion defense policy bill for fiscal year 2027.

Spending is expected to go up since the conflict in Iran has drained U.S. The Center for Strategic & International Studies warned that the depleted inventories have “created a window of vulnerability for a potential Western Pacific conflict” and said that rebuilding those inventories has become “a major concern.” This is expected to take multiple years, which means defense contractors should see a steady increase in U.S. Instead of guessing which defense stocks will be the biggest winners, investors can focus on defense ETFs that offer exposure to the entire industry.

Here are seven of the best defense ETFs to buy for 2026: ETF Expense ratio Total assets Invesco Aerospace & Defense ETF (ticker: PPA) 0.58% $8.4 billion State Street SPDR S&P Aerospace & Defense ETF (XAR) 0.35% $6.1 billion iShares U.S. Aerospace & Defense ETF (ITA) 0.38% $14.4 billion Global X Defense Tech ETF (SHLD) 0.50% $7.1 billion State Street SPDR S&P Kensho Future Security ETF (FITE) 0.45% $144 million Select STOXX Europe Aerospace & Defense ETF (EUAD) 0.50% $1.2 billion Themes Transatlantic Defense ETF (NATO) 0.35% $103 million Invesco Aerospace & Defense ETF (PPA) The Invesco Aerospace & Defense ETF focuses on U.S. companies that support defense, homeland security and aerospace operations.

(RTX ), GE Aerospace (GE) and Boeing Co. (BA) are the top three positions that make up more than 20% of the fund’s total assets. Most of the fund’s holdings are large-cap stocks, which is a good setup for investors who want less volatility.

The fund has outperformed the S&P 500 year to date and has produced an annualized 17.8% return over the past decade. Its three-year annualized return of 28.6% shows that recent momentum has been strong amid ongoing conflicts. This defense ETF has roughly 60 holdings, but it is top-heavy, with its top 10 holdings making up more than half of its to…