Are defense ETFs expensive right now?
Updated October 28, 2026
Are defense ETFs expensive today? Yes — measured against their own history, and by an unusually wide margin. On ETF Copilot's own daily calculation, as of October 28, 2026, ITA (iShares U.S. Aerospace & Defense ETF) trades at a look-through price-to-earnings ratio of 31.6 against a long-run median of 26.5 — more expensive than 80% of its last 9 years.
Defense ETFs re-rated after the 2025 spending run-up, so the question is less whether they are expensive than where each one sits against how it traded before that run-up.
How ITA's valuation compares with its own past
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 | 31.6 | 26.5 | 80%of 9 years | 53 | 2.1 | 2.5 |
| PPAInvesco Aerospace & Defense ETF | 30.5 | 24.2 | 80%of 9 years | 67 | 1.7 | 2.1 |
| XARState Street SPDR S&P Aerospace & Defense ETF | 31.2 | 26.2 | 76%of 9 years | 50 | 2.1 | 0.9 |
| FITEState Street SPDR S&P Kensho Future Security ETF | 23.9 | 26.3 | 21%of 7 years | 78 | 6.9 | 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 defense ETFs 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 31.6 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 for defense ETFs, and a fund can be at the wrong end of either one on its own.
No fund in this group is cheaper than the group's midpoint on our value score while also holding better-than-midpoint companies by our quality score. Stated plainly because it is the answer the comparison produced, not a gap in the data.
Trailing earnings are the harshest lens available
Every P/E in this comparison of four defense ETFs 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 31.6 to 24.7, XAR from 31.2 to 24.0 and PPA from 30.5 to 23.6.
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 28.2 times — still above its own median of 26.5.
What would have to be true for today's reading to hold
Stated as conditions, because a condition is checkable and because no ETF Copilot figure says what to do about any fund:
- The earnings have to arrive. ITA's multiple falls from 31.6 to 24.7 only if the forecast earnings are delivered in full. Delivered halfway, it is around 28.2 times.
- The way each fund is built has to keep mattering. XAR holds 50 companies and scores 0.9 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 2.0 for XAR to 5.3 for PPA, against 6.9 for VOO. The same funds produced both the multiples 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 43% of its own record, at 27.9 times against a median of 30.2, and VOO is more expensive than 63% of its own record, at 24.7 times against a median of 22.6. The same measurement, applied to the other themes people ask about: semiconductor ETFs sit above 60% to 96% of their own records; AI ETFs sit above 0% to 57% 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 31.6 times against a median of 26.5, more expensive than 80% of its own last 9 years, and it has been above that median for all of the last 2 years. Against the earnings expected next year the same fund is at 24.7 times, so the two lenses give different answers and this comparison of defense ETFs shows both.
Which defense ETF is cheapest against its own history?
FITE, cheaper than 79% of its own last 7 years — the lowest of the four defense ETFs compared, 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 23.9 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 ETF Copilot figure 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 October 28, 2026. https://etf-copilot.com/learn/are-defense-etfs-expensive
Method. The trailing price-to-earnings ratio is computed by ETF Copilot from each fund's published holdings — every holding's ratio, weighted by its share of the fund — not quoted from a data provider. The monthly history uses the holdings held at each date, so the line is comparable with itself. “More expensive than” is the share of the fund's own history that sat below today's reading. Value, quality and risk are our own scores, where higher is better. Recalculated daily.
See ITA in full, and any of the funds we cover →
Sources: iShares ITA fund page, State Street XAR fund page, State Street FITE fund page
Nothing on this page is investment advice, a recommendation, or a forecast of returns.