John Hood
IShares Aero & Def. ETF
ITA-N
COMMENT
Aug 15, 2018
ITA-N vs. XAR-N He knows the defence sector. A problem in defence is the huge run-up in Boeing, which dominates defence. ITA has a cap system in place to deal with this over-concentration in a few defence stocks, but XAR is odd because it's equal-weighted, therefore carries more risk. He prefers ITA.
(A Top Pick September 12/17 Up 25%)He still likes this ETF. It has technically shown another bullish breakout and he is considering re-entering this again soon. Increased foreign spending on security will continue to make this a winner.
It is made up of biggest US defence contractors. Defence spending will continue to be a big thing, particularly under the Trump regime. Has come down significantly the last few weeks and is a good buying opportunity.
A good option to mitigate risk in individual companies is to buy a basket. He does this for mining, health care and would do it for the defence and aerospace industry too.
Trump, if he wins, he will spend more on military while Biden will probably take money away from it. The question is, which will win? He thinks Biden will win. The sector probably has some downside risk. China just came out with sanctions against the US and some companies in this fund for sale of military equipment to Taiwan. He would hold off.
Boeing is the second-largest holding in this ETF. Today's announcement won't have a major impact. Use this dip to buy or enter. They just announced production delays.
Exposure to some of the biggest names. A lot of defense contractors, performed well with everything going on out there in the world. The only name in there that he's not wild about is BA, it's had trouble.
ITA-N vs. XAR-N He knows the defence sector. A problem in defence is the huge run-up in Boeing, which dominates defence. ITA has a cap system in place to deal with this over-concentration in a few defence stocks, but XAR is odd because it's equal-weighted, therefore carries more risk. He prefers ITA.