ETF AVAILABLE THROUGH POWERSHARES (NYSE: PPA)
Benchmark Index: SPADE Defense Index (NYSE: ^DXS)
Exchange Traded Fund licensee: InvescoPowershares Aerospace & Defense ETF (NYSE: PPA)
About the SPADE Defense Index
The SPADE® Defense Index (NYSE: ^DXS) is a modified capitalization-weighted index comprised of publicly traded companies that benchmarks the performance of companies involved with defense, homeland security, and space. The Index is composed of more than 50 firms with representative business activities including: naval vessels, military aircraft, missiles and munitions, battlespace awareness, C4ISR, network centric warfare, homeland security including border security and biometric and screening systems, and space systems.
Index values are distributed by the NYSE/ICE Data Services under the ticker 'DXS'. The InvescoPowershares Aerospace & Defense ETF, designed to track the SPADE Defense Index, trades under the ticker 'PPA'. Historical data for the Index is available from 30 December 1997. The ETF was launched on 26 October 2005.
About the Market
The Defense and Homeland Security market represents nearly 5% of U.S. GDP and includes a number of the world's leading industrial firms as well as those developing the next generation of cutting-edge technologies.
The sector's performance over the past two decades has been driven by a global increase in spending by governments for defense and security -- now totaling more than $1.1 Trillion annually and the purchase of commercial aircraft designed to fly with increased fuel efficiencies. Even as the U.S. market tightens, international defense, and commercial sector opportunities are rising.
Historically over the past forty years, the sector has showed steady gains when factoring in reinvested dividends, even during periods of budget tightening. Defense companies over time have been adept at returning value to shareholders and unlike previous cycles, the balance sheets of defense companies are currently in a position of strength. With low valuations, many analysts believe that the sector continues to present opportunities.
For more on the aerospace and defense market, read our commentary and industry statistics found in our newsletter -- "The SPADE Investor".
The Powershares Aerospace & Defense ETF (PPA), which tracks the Index, is highly liquid.