The Defense ETF Duel: Old Guard Aerospace or Next-Gen Tech?
2026-10-16 12:45
•Jake Lerch •The Motley Fool
••• •••••••• Axe Cap view
Choosing Between Traditional and Next-Gen Defense ETFs
PPA’s stability versus MISL’s tech-driven growth offers distinct paths for South African investors eyeing defense exposure.
For local investors, aerospace and defense might seem distant, but the USD/ZAR exchange rate and global tech trends link these ETFs to our markets. PPA leans on classic giants like Boeing and GE, delivering steady dividends and smoother swings. It suits those who want indirect exposure to a sector less volatile than pure tech plays. MISL, by contrast, packs its portfolio with cutting-edge names like Palantir and SpaceX, betting on growth in data, AI, and space tech. It’s a riskier bet with lower dividends but more upside if innovation drives the sector forward. Given the rand’s sensitivity to risk appetite, PPA’s steadier profile aligns better with conservative local portfolios, especially with inflation concerns still lingering. But MISL appeals if you want to back tomorrow’s defense tech disruptors. The main caveat: a sudden shift in US defense policy or a spike in rand weakness could tilt these plays wildly. this is just our opinion and not financial advice
I’d lean toward PPA for broader, more predictable exposure and consider MISL only as a small satellite holding for tech-driven growth. Hedge with USD/ZAR options to manage currency risk.
- USD/ZAR
- PPA
- MISL
- US defense budget shifts
- rand volatility impacting foreign returns
6/10
Invesco Aerospace & Defense ETF (PPA) and First Trust Indxx Aerospace & Defense ETF (MISL) offer different approaches to defense sector investing. PPA, the larger and more established fund with $7.4B in AUM, delivers higher dividends (0.4% yield) and lower volatility with traditional aerospace exposure. MISL, launched in 2022 with a more concentrated 39-holding portfolio, emphasizes next-gen defense tech including Palantir and SpaceX. Since 2022, PPA has outperformed with 117% total return (21.6% CAGR) versus MISL's 105% (19.8% CAGR), though both have slightly elevated expense ratios around 0.58-0.60%.
Our take is based on reporting first published by The Motley Fool.