New aerospace & defense ETF has plans to take off

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A new aerospace and defense exchange traded fund looks to hit the market under the First Trust umbrella. The fund intended to come to market is the First Trust Indxx Aerospace & Defense ETF.

Per the U.S. Securities and Exchange Commission prospectus the ETF will invest in stocks that are involved in developing hypersonic warfare weapons technology for defense related applications.

Additionally, the fund will track stocks that develop weapons including high power microwaves, laser technology, space technology, unmanned aerial vehicle/advance air mobility companies, and autonomous, cybersecurity and C5ISR systems.

In accordance with the preliminary filing no ticker symbol or expense ratio was tied to the ETF. However, the SEC filing did state that the fund will be passively managed and its makeup of stocks will come from the above listed criteria. “From the list of eligible companies, a total of 50 companies ranked by market capitalization will be selected.”

The aerospace and defense fund will more than likely find itself competing for market share against other related funds such as the iShares U.S. Aerospace & Defense ETF (BATS:ITA), Invesco Aerospace & Defense ETF (NYSEARCA:PPA), and the SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR).

Year-to-date price action: ITA -4.9%, PPA -4%, and XAR -14.2%.

In broader market news, the stock market is struggling on Monday with few catalysts and selling in growth sectors as all three major averages trade in the red.

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Jason Capul