Support American Troops With Your Portfolio? It's Possible: Here's How
Ever since September 11, 2001, America has been at war with terrorist organizations in Iraq, Afghanistan, Syria and all over the world.
Sadly, though our brave service men and women have made huge strides in defeating Al-Qaeda, the Taliban and ISIS, the recent attacks in Paris are a sobering reminder that the war is far from over.
The Companies Behind The American Efforts
Thankfully, there are plenty of world-class private defense companies that are supporting the U.S. military’s efforts with their research, their technology and their innovation. Conversely, the U.S.’s ongoing military operations around the world are providing a major boost to these companies’ bottom lines.
The U.S. military budget has nearly tripled over the past 30 years, and we now spend more than half a trillion dollars per year defending our freedom.
Investing In America’s Defense
For investors that want to be a part of this boom, disruptive startup Stash allows you to invest in the exchange-traded fund (ETF) called the iShares U.S. Aerospace & Defense ETF (NYSE: ITA). Nicknamed the “Defending America” fund, this ETF includes shares of 38 top private companies that support the U.S. military efforts around the globe.
Many of the companies included in the fund are household names, such as Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT) and Precision Castparts (NYSE: PCP). However, the Defending America fund also has a number of smaller holdings in companies that are flying under the radar of many defense investors, including Taser International (NASDAQ: TASR) and Digitalglobe (NYSE: DGI).
Never Give Up
If you believe that the U.S. military will not quit in its global war on terror until the job is done, the Defending America ETF might be the right investment for you. While the future is always uncertain, the fund has outperformed the S&P 500 in the past five years.
In addition, the fund’s expense ratio, which is the amount of money spent on fees and administrative costs, is only 0.43 percent.
Presidential Election Opportunity
If you’ve always wanted to invest in the defense sector but have been waiting for the right opportunity, now could be your best chance. Historically, defense stocks tend to outperform the rest of the market leading up to U.S. presidential elections.
“In nearly every election cycle in the past 20+ years, the defense stocks have outperformed in the year prior to Election Day,” Deutsche Bank analyst Myles Walton says.
Deutsche Bank theorizes that this effect is likely due to the increased public awareness of defense issues during the campaign season.
The Defending America ETF provides a simple opportunity for investors to take a diversified position in the private companies behind the U.S. military. According to the aforementioned analyst, defense will be a great investment through the end of 2016, and as long as the U.S. keeps fighting to keep its citizens safe at all costs, the defense business will be booming.
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