iShares Dow Jones US Aerospace & Defense ETF (NYSEARCA:ITA) — As I reviewed a list of ETF returns, ITA, which tracks the Dow Jones US Select Aerospace & Defense Index, stood out as a consistent performer with a low expense ratio of 0.44%.
Reviewing my August AAII ETF guide, this fund shows a line of black numbers, and no red, indicating annual returns that are difficult to match: six-month (+18.98%), one-year (+10.70), three-year (+14.89%), five-year (+17.49%) and 10-year (+11.82%). These returns are through July 31, and they don’t reflect sales charges and assume the reinvestment of dividends and capital gains. ITA pays an annual dividend of $1.35 per share for a current forward yield of 1%.
Morningstar gives ITA a five-star rating for the fund’s unusual combination of below-average risk and high returns.
The top 10 holdings in ITA are United Technologies Corporation (NYSE:UTX), Boeing Co (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), General Dynamics Corporation (NYSE:GD), Raytheon Company (NYSE:RTN), Northrop Grumman Corporation (NYSE:NOC), TransDigm Group Incorporated (NYSE:TDG), L-3 Communications Holdings, Inc. (NYSE:LLL), Rockwell Collins, Inc. (NYSE:COL) and Textron Inc. (NYSE:TXT).
Turning to the chart, we see that ITA made a new high in early June, which exceeded its previous all-time high of around $125, made in the second quarter of 2015. But in late June, profit-taking drove shares below their 50-day moving average. However, ITA managed to hold above its 200-day moving average and preserve its bull market stance.
The current channel in which shares trade is a bull recovery channel, which is confirmed by very high volume at its start and a supportive MACD indicator.
Buy ITA as an investment in the U.S. aerospace and defense industries, which are uniquely suited to meet the replacement and new equipment needs of the U.S. armed forces.
