The flame-up between the United States and Iran earlier this month appeared to cool down after Iran retaliated with a ballistic missile strike on joint Iraqi-U.S. bases.
Tensions are still high, but the chances of a direct military confrontation have seemingly plummeted, at least for now. Investors need to prepare for a decade that will see nations invest more and more in their military capabilities.
United States military spending eclipsed the $680-billion mark in the latter half of the 2010s. The previous year marked the fifth consecutive year of defence spending increases. Global defence spending also increased.
Asia and Oceania have posted three decades of growth in military spending. Rising great powers like China and India are putting huge investments in defence.
For this reason, investors should target the iShares Aerospace and Defence ETF (NYSE:ITA) before January comes to a close.
The ETF climbed 30% in 2019 and has already increased 3.7% to start this year as of close on January 21. The ETF achieved positive capital growth in every year except for 2018 in the 2010s.
Some of the top holdings in this ETF include Boeing, one of the top defence contractors in the world. Indeed, Boeing’s aerospace struggles are one of the key reasons the ETF has not performed even better to start this year.
Other top holdings include defence giants like United Technologies (NYSE:UTX), Lockheed Martin (NYSE:LMT), and Raytheon (NYSE:RTN).
