Despite Budget Headwinds, Defense ETFs Look Attractive
The sell-off in aerospace and defense names appears overdone.
This summer's federal budget negotiations and uncertainty over upcoming federal spending have hammered aerospace and defense stocks, as investors have feared the impact of further budget cuts on those firms' results.
For investors who have seen this carnage that aerospace and defense firms sustained over the summer and believe that the sell-off may be overdone and are interested in investing in the subsector, an exchange-traded fund may be the answer. The ETF structure allows investors to go with a basket of firms in the subsector and thus avoid single-stock investing, given the broad uncertainty surrounding just which aerospace and defense contractors may be the winners and losers in future rounds of budget cuts.
Robert Goldsborough does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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