SPDR S&P Kensho Future Security ETF (FITE +2.14%) tracks the S&P Kensho Future Security Index, a modernized version of a defense index. The Kensho index is designed to track companies focused on issues such as cybersecurity, advanced border security, military robotics, drones, and space technology. This is a relatively new fund and index.
The fund has about $113 million in assets. As of February 2026, the top five holdings in the SPDR S&P Kensho Future Security ETF were:
- Plant Labs (PL +5.26%)
- Red Cat Holdings (RCAT +1.07%)
- ESCO Technologies (ESE -1.68%)
- Moog (MOG.A +0.16%)
- Elbit Systems (ESLT -0.12%)
The fund reports that about 35% of its assets were invested in aerospace and defense companies, with 21% in systems software companies, 8% in communications equipment makers, and 6% in research and consulting. The SPDR S&P Kensho Future Security ETF has an expense ratio of 0.45%.
Why invest in defense ETFs?
There is solid, sustainable demand for both commercial aerospace and defense equipment, and top companies should be able to provide a steady stream of income and growth for long-term-focused investors. With planned military expenditures expected to rise both in the U.S. and among its allies, there should be ample business for the entire sector.
But deciding between individual companies is difficult. And with both commercial aerospace and defense companies primarily serving a small number of customers, the stocks tend to move in unison based on demand.
Investing in defense ETFs allows you to gain exposure to those long-term growth trends without having to pick winners and losers among individual companies. It also gives you one-stop access to a wide range of commercial aerospace and defense businesses, and avoids concentration on just one area of the defense sector, like shipbuilding.
How to choose defense ETFs
All these ETFs are broadly in the same category, but they contain different holdings driven by different themes. Investors should look for ETFs that cater to their specific interests, considering factors such as whether:
- The ETF is more focused on commercial or defense holdings.
- The ETF focuses on parts suppliers or prime manufacturers.
- The ETF is looking for growth, income, or a mix of the two.
- The ETF is focused on higher risk, higher reward disruptors or traditional manufacturers.
- The ETF is focused on companies doing business in the U.S., elsewhere, or both.
Investors can find the answers to these questions by visiting each ETF’s website, where they will find a list of holdings and a paragraph discussing investment themes and goals. You should also pay close attention to fees. ETF fees can vary from fund to fund and from company to company, and higher fees will make it harder for an ETF to beat the market.