With Trump’s Military Maneuvers, One ETF Looks Like A Screaming Buy

By Michael Williams Published Jan 10, 10:37AM EST

Quick Read

ITA holds $12B in assets with top positions in GE Aerospace at 21.5% and RTX at 16.4%.
Trump banned defense contractor dividends and buybacks on January 7 to force reinvestment in production capacity.
The $900B defense bill passed in December provides baseline funding before any supplemental appropriations.

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With Trump’s Military Maneuvers, One ETF Looks Like A Screaming Buy — © TebNad / iStock via Getty Images

The iShares U.S. Aerospace & Defense ETF (NYSEARCA:ITA | ITA Price Prediction) has surged 61% over the past year, and President Trump’s aggressive military posture suggests the rally may continue. With the White House discussing military options for Greenland and maintaining control over Venezuela after capturing its leader, defense spending looks poised to accelerate. For investors wanting exposure without picking individual winners, ITA offers a straightforward solution.

The ETF holds $12 billion in assets with a 0.38% expense ratio, providing concentrated exposure to 97% industrials. Top holdings include GE Aerospace (NYSE:GE) at 21.5%, RTX (NYSE:RTX) at 16.4%, and Boeing (NYSE:BA) at 8%. Smaller positions in Rocket Lab (NASDAQ:RKLB) and Kratos Defense (NASDAQ:KTOS) add exposure to emerging defense technologies. The fund is up 14.8% in the past month as Trump’s territorial ambitions have escalated.

An infographic detailing the iShares U.S. Aerospace & Defense ETF (ITA) as a Geopolitical Defense Play. It is divided into 'HOW IT WORKS,' 'BEST USE CASE,' 'PROS,' and 'CONS' sections. 'HOW IT WORKS' describes the sector focus, concentrated stock basket, and key stats including $12.0 Billion AUM and 0.38% expense ratio, with a pie chart showing top holdings (GE Aerospace 21.51%, RTX Corp 16.36%, Boeing 7.97%). 'BEST USE CASE' highlights geopolitical tensions, long-term outperformance (+79.03% over 5 years), and a momentum play (+61.59% past year). The 'PROS' section, marked with green upward arrows, lists exceptional recent momentum, consistent long-term outperformance, the $900B Bipartisan Defense Bill, low expense ratio, and strong institutional backing. The 'CONS' section, marked with red downward arrows, lists Trump's dividend & buyback halt order, high concentration risk (Top 3 Holdings = 45.8%), Boeing exposure, and recent bearish sentiment. Data is as of January 9, 2026. — This infographic provides a comprehensive overview of the iShares U.S. Aerospace & Defense ETF (ITA), detailing its investment strategy, performance, and key pros and cons for investors considering a geopolitical defense play.

The Geopolitical Spending Catalyst

Trump’s military maneuvers represent the clearest macro tailwind for defense stocks in years. The administration is considering using military force to acquire Greenland, maintaining troops in Venezuela, and discussing the Panama Canal. White House press secretary Karoline Leavitt stated that “utilizing the U.S. Military is always an option” when discussing Greenland acquisition. The successful Venezuela operation demonstrated willingness to deploy force, and Trump has framed Greenland as essential for deterring Russian and Chinese Arctic activities.

Each potential theater requires hardware, logistics, and sustained presence. Watch Congressional defense appropriations hearings and quarterly Pentagon procurement announcements. The $900 billion defense authorization bill passed in December provides the baseline, but supplemental requests typically follow new operations. Monitor defense budget amendments quarterly and track White House statements on territorial priorities.

The Dividend Freeze Complication

Trump’s January 7 order banning defense contractor dividends and buybacks creates a counterintuitive opportunity. He accused companies of prioritizing shareholders over production capacity, declaring on Truth Social that he “will not permit” such payments until firms build new plants. Defense contractor stocks declined following the announcement.

Frozen dividends don’t reduce government contracts or earnings power. They simply redirect capital toward expansion, which should accelerate future growth. The policy forces contractors to reinvest in productive capacity rather than returning cash to shareholders. Defense contractors are trading lower following the initial negative reaction to the dividend freeze policy.

Consider XAR for Simplicity

The SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR) offers similar exposure with equal-weighted holdings rather than ITA’s market-cap approach. This reduces concentration risk from GE Aerospace’s 21.5% weight in ITA and provides more balanced exposure across defense contractors. XAR’s 0.35% expense ratio is slightly lower, and its equal-weighting automatically rebalances away from overvalued names.

The biggest factor to watch is whether Trump’s territorial ambitions translate into supplemental defense appropriations, while the dividend freeze may paradoxically strengthen long-term fundamentals by forcing capital into productive capacity.

About the Author Michael Williams →

I am a long time investor and student of business, and believe finding good companies that can become great investments is the best game on earth. After 20 years of writing and researching the public markets it is clear that individuals have never had more tools and information to take control of their financial lives. From ETFs and $0 commissions to cryptos and prediction markets there has never been a greater democratization of access to investing.

I write to help people understand the investments available to them so they can make the best choice for their portfolio, whether they're starting out or looking for income in retirement.