ETF Comparison: iShares U.S. Aerospace & Defense ETF (ITA) Versus Global X Defense Tech ETF (SHLD)

ITA vs SHLD: Total cost of ownership

On the surface, ITA

is the cheaper ETF to own. It charges a 0.40% expense ratio, compared to SHLD’s

SHLD

slightly higher 0.50%. Both are reasonable for thematic ETFs, but ITA clearly has the edge on fees.

When it comes to implicit trading costs, ITA is again more cost-efficient. Its 30-day average bid-ask spread is just 0.041%, while SHLD’s is nearly double at 0.081%. Both are liquid, but if you're looking to minimize frictional costs, ITA wins out.

Verdict: Add it all up, and ITA is the cheaper aerospace and defense ETF to own.

ITA vs SHLD: Methodology and holdings

The benchmark index is where the difference between these two defense ETFs becomes night and day.

Starting with ITA, it tracks the Dow Jones U.S. Select Aerospace & Defense Index, a concentrated portfolio of 36 U.S.-listed companies weighted by market cap.

On the other hand, SHLD

tracks the proprietary Global X Defense Tech Index. There’s little in the way of an aerospace focus, and unlike ITA

ITA

, SHLD includes non-U.S. contractors as well as intelligence and cybersecurity companies.

Practically speaking, both ETFs feature U.S.-heavy portfolios, but less so for SHLD, which has 50% of its holdings outside the U.S, with a large focus on EU countries.

Both are top-heavy, but ITA is slightly heavier, at 87.19% of its weight, in the top 15 holdings, compared to 79.08% for SHLD.

In terms of the basket, ITA is extremely concentrated. Because it’s market cap weighted, a handful of big U.S. contractors dominate: GE Aerospace sits at 20.94%, RTX at 14.35%, and Boeing at 9.98%.

SHLD, on the other hand, is more evenly distributed and includes major non-U.S. names like Rheinmetall AG, BAE Systems, Leonardo, and SAAB. In addition, you’ll find intelligence contractors like Palantir, and unlike ITA, there’s less emphasis on pure-play aerospace contractors.

Verdict: I personally prefer SHLD. While ITA

offers classic exposure to legacy U.S. aerospace and defense prime contractors, SHLD

SHLD

-1.09%

brings in global players and modern defense themes like cyber, data, and surveillance. It’s simply more representative of where the industry is headed.

ITA vs SHLD: Risk and return

Because SHLD is relatively new, it’s hard to draw long-term comparisons—but the short-term numbers are still worth examining.

On a one-year trailing basis and year to date, SHLD has massively outperformed ITA, both in terms of returns and flows. While SHLD has brought in fresh assets, ITA has actually posted net outflows over the past year.

Risk-wise, over the same period, SHLD has also been slightly less volatile, with both shorter and shallower maximum drawdowns than ITA.

Looking at a longer backtest from September 13, 2023, to June 23, 2025, SHLD posted an eye-popping 63.11% annualized return, compared to 34.81% for ITA.

Both ETFs benefited from conflict-driven tailwinds, but ITA’s focus on U.S. contractors has had some headwinds, namely defense procurement bottlenecks tied to political turnover and inefficiencies, as well as budget pressures.

By contrast, SHLD’s EU-heavy portfolio benefited from rearmament themes and higher defense budgets across Europe. Its inclusion of intelligence and cybersecurity firms like Palantir also gave it a performance edge.

Verdict: I don’t expect this level of outperformance to continue, but SHLD clearly won this round. The global diversification and broader take on modern defense gave it a big lift.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.