The Invesco Aerospace & Defense ETF (PPA) offers broad exposure to military contractors with comparatively lower price volatility, while the U.S. Global Jets ETF (JETS) targets the more concentrated recovery and growth story of airline operators. Brokers from Rubinax dive into this topic, noting that investors seeking industrial sector exposure often have to choose between these two very different approaches.
While JETS concentrates specifically on the global airline ecosystem, PPA casts a wider net across defense contractors and aerospace manufacturers more broadly.
Comparing Costs and Fund Size
Invesco Aerospace & Defense ETF (PPA) carries a slightly lower expense ratio of 0.58%, compared to 0.60% for U.S. Global Jets ETF (JETS), a modest but relevant advantage for long-term investors focused on minimizing costs. Over extended holding periods, even small differences in fees can compound into noticeable impacts on total returns.
On the income side, the dynamic shifts. JETS offers a higher trailing dividend yield of 0.80%, double the 0.40% yield from PPA, which may make it more appealing for investors prioritizing current income over cost efficiency. This creates a clear trade-off between lower fees and higher yield, depending on investment objectives.
The disparity in fund size is also significant. PPA manages approximately £8.0 billion in assets, far exceeding the roughly £851.4 million held by JETS. This gap reflects PPA’s longer operating history, broader diversification, and stronger institutional adoption, all of which can contribute to greater liquidity and stability.
Taken together, PPA leans toward cost efficiency and scale, while JETS offers higher income potential with a more concentrated exposure to the airline industry. The choice between the two ultimately depends on whether an investor prioritizes lower expenses and diversification or higher yield and sector-specific exposure.
Risk Profiles Tell Very Different Stories
The volatility difference between these funds is striking. PPA carries a beta of just 0.74, meaning it historically moves less sharply than the broader market, while JETS carries a much higher beta of 1.20.
That risk gap shows up clearly in drawdown data too. Over the past five years, JETS experienced a maximum drawdown of 40.40%, more than double PPA’s 18.40% maximum decline over the same period, underscoring just how much more turbulent the airline-focused fund has been for holders.
What’s Actually Inside Each Fund
PPA weights its portfolio 90% toward Industrials, holding 61 securities with top positions in GE Aerospace at 7.3%, RTX at 7.2%, and Boeing at 6.8%. The fund also holds defense-specific names like L3Harris Technologies, General Dynamics, and Northrop Grumman, companies benefiting directly from rising U.S. defense spending.
JETS, by contrast, allocates 89% to Industrials and leans heavily into commercial aviation, with 48 holdings led by United Airlines at 11.1%, American Airlines at 10.89%, and Southwest Airlines at 10.7%. Notably, JETS carries far more small and mid-cap exposure, with 35% in small caps and 44% in mid caps, compared to PPA’s 61% large-cap weighting.
Recent Performance Favors JETS, but History Favors PPA
Year-to-date, JETS has surged 18.4%, outpacing PPA’s 14% gain, driven largely by its heavier small-cap exposure during a historic rally for smaller stocks, their best year since 1991. Over the trailing 52 weeks, that gap widens further, with JETS up 46.1% versus 25.4% for PPA.
Longer-term, though, the picture flips entirely. PPA has outperformed JETS across the 3-, 5-, and 10-year timeframes, delivering an annualized 17.8% return over the past decade compared to just 5.2% for JETS. A $1,000 investment five years ago would now be worth $2,411 in PPA versus only $1,293 in JETS.
Which Fund Is the Better Buy?
The airline-focused industry tracked by U.S. Global Jets ETF (JETS) remains structurally cyclical, characterised by intense pricing competition, high fixed costs, and sensitivity to economic conditions.
These factors make sustained profitability difficult for many carriers, particularly during periods of weaker demand or rising input costs such as fuel. This inherent instability is reflected in JETS’ profile, including its higher beta and historically deeper drawdowns compared to more diversified sector funds.
That said, market dynamics are not static. Recent momentum in airline stocks has been notably strong, supported by resilient travel demand, improving capacity discipline, and easing cost pressures. In the current environment, where risk appetite remains relatively firm and small-cap sentiment has yet to show signs of a sharp reversal, JETS is benefiting from renewed investor interest.
As a result, despite its volatility, JETS may present a more compelling near-term opportunity. For investors comfortable with elevated risk, the fund offers greater upside potential driven by cyclical recovery and momentum, even if that comes with the trade-off of increased price swings.
Ultimately, the positioning is clear: JETS leans toward short-term performance and higher growth potential, while requiring investors to accept the inherent volatility of the airline sector as part of the investment thesis.
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