Are defense ETFs expensive right now?
Updated September 11, 2026
Defense ETFs re-rated after the 2025 spending run-up, so the question is less whether they are expensive than how far each one sits above where it traded through the previous decade. Yes — measured against their own history, and by an unusually wide margin. On ETF Copilot's own daily calculation, as of September 11, 2026, ITA (iShares U.S. Aerospace & Defense ETF) trades at a look-through price-to-earnings ratio of 34.3 against a long-run median of 25.6 — more expensive than 84% of the 114 monthly readings since May 2017. Three of the four funds on this page sit above their own long-run median. Inside the group FITE sits above 25% of its own record and XAR above 89% of its own. On forward earnings the picture changes, and that distinction is the whole argument — it is set out below.
How ITA's valuation compares with its own past
The line is ITA's trailing price-to-earnings ratio, one reading per month across 114 observations since May 2017 — every one of them our own calculation from the fund's holdings rather than a figure quoted from a provider.
Read it as a shape rather than a number: ITA sits at 34.3 against a median of 25.6 across 114 monthly readings, and 96 of those months were cheaper than today.
All four funds, and where each sits in its own range
| Fund | P/E now | Own median | More expensive than | Holdings | Value score | Quality score |
|---|---|---|---|---|---|---|
| ITAiShares U.S. Aerospace & Defense ETF | 34.3 | 25.6 | 84%of 114 months | 51 | 2.3 | 2.7 |
| PPAInvesco Aerospace & Defense ETF | 30.8 | 24.1 | 84%of 114 months | 61 | 1.9 | 1.8 |
| XARState Street SPDR S&P Aerospace & Defense ETF | 33.8 | 24.4 | 89%of 114 months | 46 | 2.1 | 0.6 |
| FITEState Street SPDR S&P Kensho Future Security ETF | 24.5 | 26.2 | 25%of 88 months | 78 | 6.4 | 0.3 |
Value, quality and risk scores are ETF Copilot's own 0–10 measures computed across every fund we cover. Higher is better on all three, so a low value score means expensive. Where a column is highlighted, amber marks the least favourable reading of the group and green the most favourable.
The four funds are not interchangeable
The prime contractors are a small group, so the difference between these funds is mostly how far past them each one reaches — into suppliers, into aerospace that is not defense, and in one case into security businesses that are software rather than hardware. That decision, not the defense label, is what each fund's multiple is measuring.
The most expensive of the four is ITA at 34.3 times earnings; the weakest on the quality of what it holds is FITE, scoring 0.3 out of 10. They are not the same fund, which is the point: price and company quality are two separate questions here, and a fund can be at the wrong end of either one on its own.
At the other end, ITA is the only fund of the four that is cheaper than the group's midpoint on our value score, at 2.3 out of 10, without also sitting below it on company quality — 2.7 out of 10.
Trailing earnings are the harshest lens available
Every figure above uses earnings already reported. On the earnings these companies are expected to make next year, the same funds carry far less stretched multiples: ITA from 34.3 to 27.8, XAR from 33.8 to 26.1 and PPA from 30.8 to 25.1.
So the answer depends almost entirely on whether the earnings growth now priced in actually arrives. On what these companies have already earned, the funds are expensive. On what they are expected to earn, they are closer to ordinary, and if the forecasts land halfway ITA sits at about 31.1 times — still above its own median of 25.6.
What would have to be true for today's reading to hold
Stated as conditions, because a condition is checkable and because nothing here says what to do about any fund:
- The earnings have to arrive. ITA's multiple falls from 34.3 to 27.8 only if the forecast earnings are delivered in full. Delivered halfway, it is around 31.1 times.
- The way each fund is built has to keep mattering. XAR holds 46 companies and scores 0.6 out of 10 on company quality; FITE spreads across 78 and scores 0.3. Those are two different bets wearing one label.
- The ride has to be tolerable. Our risk score runs 0 to 10, where 10 is the steadiest fund in the universe we cover. Across this group it runs from 1.8 for XAR to 2.9 for FITE, against 7.5 for VOO. The same funds produced the multiples above and those scores.
How this compares with the wider market
Defense ETFs are not the only funds trading away from their own past. QQQ is more expensive than 93% of its own record, at 30.8 times against a median of 25.1, and VOO is more expensive than 84% of its own record, at 25.2 times against a median of 21.5. The same measurement, applied to the other themes people ask about: semiconductor ETFs sit above 89% to 97% of their own records; AI ETFs sit above 4% to 95% of their own records; data center and AI power ETFs sit below their own long-run multiples.
Is ITA expensive right now?
Against its own record, yes on trailing earnings: ITA trades at 34.3 times against a median of 25.6, more expensive than 84% of its own 114 monthly readings, and it has been above that median in 24 of the last 24 months. Against the earnings expected next year the same fund is at 27.8 times, so the two lenses give different answers and the page above shows both.
Which defense ETF is cheapest against its own history?
FITE, cheaper than 75% of its own 88 monthly readings — the lowest of the four funds here relative to its own past. That is a different question from which fund is cheapest outright: on price alone the lowest multiple of the group is FITE at 24.5 times. A fund can carry the lowest multiple in its group and still be expensive for itself.
Why do two defense ETFs show different P/E ratios?
Because two defense ETFs hold different companies in different proportions. A fund's price-to-earnings ratio is the weighted average of the ratios of what it holds, so a fund capped at the largest and most profitable names produces a different figure from one that equal-weights a much wider list. Providers also differ on trailing versus forward earnings, on how loss-making companies are handled, and on the date of the holdings file. Every figure on this page is computed the same way for every fund, from each fund's own published holdings.
Does a high P/E mean these funds will fall?
No. The ratio measures price against earnings already reported. It carries no information about what happens next, and reading a forecast into a measurement is the most common mistake made with it. What it does tell you is where a fund sits relative to what buyers have been willing to pay for the same fund in the past, which is a fact about the past and the present only.
Cite this
ETF Copilot, “Defense ETFs measured against their own price-to-earnings history”, figures as of September 11, 2026. https://etf-copilot.com/learn/are-defense-etfs-expensive
Method. The price-to-earnings ratio is trailing twelve-month, computed by ETF Copilot from each fund's own published holdings rather than quoted from a data provider: every holding's ratio, weighted by its weight in the fund, across the whole portfolio and not the top ten. The monthly series is rebuilt from the holdings as they stood at each date, so the line is comparable with itself. “More expensive than” is the share of that fund's own monthly readings sitting below today's. History lengths differ by fund, from 88 monthly readings to 114, because the funds launched at different times; each percentile is measured against that fund's own record and no other. Value, quality and risk scores are ETF Copilot's own 0–10 measures computed across every fund we cover; higher is better on all three, so a low value score means expensive. Figures are as of September 11, 2026 and are recalculated daily.
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