Two Different Approaches to the Aviation Industry

Investors seeking exposure to aviation-related industries often face a choice between commercial air travel and aerospace and defense companies. While both sectors are linked to aviation, their business models and growth drivers are significantly different.

The Invesco Aerospace & Defense ETF focuses on companies involved in military systems, aerospace manufacturing, homeland security, and defense technology. Meanwhile, the U.S. Global Jets ETF concentrates primarily on airline operators and companies tied directly to passenger air travel.

Although both funds fall largely within the industrial sector, the factors influencing their performance differ substantially. Airline profitability is closely tied to consumer demand, economic conditions, and fuel costs, while defense contractors benefit from government spending programs, long-term contracts, and national security priorities.

Portfolio Composition Highlights the Difference

The Invesco Aerospace & Defense ETF tracks the SPADE Defense Index and holds approximately 60 companies. Its largest positions include Boeing, RTX Corporation, and GE Aerospace, alongside major defense contractors such as L3Harris Technologies, General Dynamics, and Northrop Grumman.

Industrials account for nearly 94% of the portfolio, with smaller allocations to technology and communication services companies.

The U.S. Global Jets ETF maintains a more concentrated portfolio of approximately 50 holdings. Its largest positions include Delta Air Lines, American Airlines, and United Airlines, making it heavily dependent on the performance of the global airline industry.

The fund also includes aircraft manufacturers and aviation-related businesses, but airlines remain the primary driver of returns.

Performance Favors Aerospace and Defense

Performance data strongly favors the Invesco Aerospace & Defense ETF.

Over the three years ending March 31, 2026, PPA generated a total return of 27.87%. Over the previous five years, the fund returned 17.85%.

By comparison, the U.S. Global Jets ETF returned 17.38% over the last three years and only 2% over the previous five years.

The performance gap reflects the differing economic environments facing the two industries. Defense spending has remained elevated due to ongoing geopolitical tensions and military operations around the world, creating favorable conditions for aerospace and defense companies.

Commercial airlines, meanwhile, continue to face challenges from fluctuating fuel prices, economic uncertainty, labor costs, and intense pricing competition.

Defense Spending Provides Stability

One of PPA’s biggest advantages is its exposure to defense contractors that benefit from multi-year government contracts.

Companies such as General Dynamics, Northrop Grumman, and L3Harris Technologies generate substantial portions of their revenue from defense programs that are less sensitive to economic downturns than consumer travel spending.

As governments around the world continue increasing military budgets amid heightened geopolitical tensions, defense-focused companies have enjoyed stronger earnings visibility and more stable cash flows.

This stability has translated into lower volatility and smaller drawdowns compared to airline-focused investments.

Income and Costs

Both ETFs charge similar management fees.

PPA carries an expense ratio of 0.58%, while JETS charges 0.60%.

JETS currently offers a slightly higher trailing dividend yield of approximately 0.80%, compared with PPA’s 0.40%. However, the yield advantage has not been sufficient to offset the stronger capital appreciation delivered by the aerospace and defense fund.

Which ETF Looks Better for Investors?

While JETS offers direct exposure to a potential rebound in global travel demand, the airline industry remains highly cyclical and vulnerable to external shocks.

PPA provides broader exposure across aerospace manufacturing, defense technology, military systems, and commercial aviation suppliers. The diversification within the aerospace and defense ecosystem has helped the fund generate stronger risk-adjusted returns over time.

For investors seeking a combination of growth potential, stability, and exposure to long-term government spending trends, the Invesco Aerospace & Defense ETF appears to offer the stronger investment case in 2026.

Outlook

Rising defense budgets, ongoing modernization programs, and increased geopolitical uncertainty continue to support demand for aerospace and defense companies. While airline stocks may benefit from periods of strong travel demand, the sector’s cyclical nature makes consistent long-term performance more difficult to achieve.

Given its stronger historical returns, broader diversification, and lower volatility profile, PPA remains the more attractive choice for investors seeking aviation-related exposure in the current market environment.