ARK Space & Defense or SPDR Aerospace & Defense: Which ETF Can Power Your Portfolio?
2026-09-30 14:21
•Brendan Coffey •The Motley Fool
• ••••• Axe Cap view
Picking the Right Aerospace & Defense ETF for Your Portfolio
Between ARKX’s innovation flare and XAR’s steady track record, here’s how to play aerospace and defense from a South African perspective.
The ARK Space & Defense Innovation ETF (ARKX) tempts with flashy 30% annual returns over three years, largely by betting big on space tech and companies like SpaceX. But it carries a hefty 0.75% fee, higher volatility, and a deeper recent sell-off. Contrast that with the SPDR Aerospace & Defense ETF (XAR), which offers steadier returns over five and ten years, lower costs (0.35%), and much broader diversification with 50 holdings, including defense stalwarts like RTX. For South African investors keeping an eye on USD/ZAR, XAR’s lower volatility is attractive, as rand swings could amplify ARKX’s wild ride. If you want exposure to aerospace without the heartburn, XAR fits better. That said, ARKX’s innovation tilt might pay off if space technology explodes as expected, though it’s a higher risk bet. this is just our opinion and not financial advice
Prefer XAR for a core aerospace and defense position due to its cost efficiency and stability. Consider ARKX only if you want a smaller, riskier satellite holding to chase potential high growth.
- XAR
- ARKX
- USD/ZAR
- Higher volatility and concentration risk in ARKX
- Rand depreciation amplifying losses in dollar-denominated assets
6/10
The article compares two aerospace and defense ETFs: ARK Space & Defense Innovation ETF (ARKX) and State Street SPDR S&P Aerospace & Defense ETF (XAR). While ARKX delivers higher 3-year returns (30.4% annualized), XAR is recommended as the better buy due to its lower expense ratio (0.35% vs 0.75%), broader diversification across 50 holdings, lower volatility, and superior 5 and 10-year performance.
Our take is based on reporting first published by The Motley Fool.