Should You Invest in the Select STOXX Europe Aerospace & Defense ETF (EUAD)?

If you're interested in broad exposure to the Industrials - Aerospace & Defense segment of the equity market, look no further than the Select STOXX Europe Aerospace & Defense ETF (EUAD), a passively managed exchange traded fund launched on October 22, 2024.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Aerospace & Defense is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.

Index Details

The fund is sponsored by Select Funds. It has amassed assets over $1.25 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Aerospace & Defense segment of the equity market. EUAD seeks to match the performance of the STOXX EUROPE TM AEROSPACE & DEFENSE INDX before fees and expenses.

The STOXX Europe Total Market Aerospace & Defense Index tracks the performance of a portfolio of the common stock of companies based in Europe whose primary business is the manufacture, service, supply and distribution of civil and military aerospace equipment, systems and technology, and civil and military defense and protective services equipment, technology, systems and services.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.5%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.Looking at individual holdings, Rolls-royce Holdings-sp Adr (RYCEY) accounts for about 21.64% of total assets, followed by Safran Sa-unspon Adr (SAFRY) and Airbus Group Se (EADSY).

The top 10 holdings account for about 94.98% of total assets under management.

Performance and Risk

The ETF has added roughly 13.55% and was up about 12.35% so far this year and in the past one year (as of 08/18/2026), respectively. EUAD has traded between $37.64 and $48.28 during this last 52-week period.

The ETF has a beta of 0.38 and standard deviation of 28.68% for the trailing three-year period. With about 23 holdings, it has more concentrated exposure than peers.

Alternatives

Select STOXX Europe Aerospace & Defense ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. EUAD, then, is not a great choice for investors seeking exposure to the Industrials ETFs segment of the market. However, there are better ETFs in the space to consider.

Invesco Aerospace & Defense ETF (PPA) tracks SPADE Defense Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. Invesco Aerospace & Defense ETF has $8.70 billion in assets, iShares U.S. Aerospace & Defense ETF has $15.07 billion. PPA has an expense ratio of 0.58%, and ITA charges 0.38%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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