The SPDR S&P Aerospace & Defense ETF (XAR) is considered the benchmark for the aerospace & defense industry, which is one of the hottest sectors you can find right now, explains John Persinos, editorial director at Investing Daily.

The exchange-traded fund’s top holdings represent a “who’s who” of major defense contractors, all of which are poised for a multi-year boom. Because Pentagon spending tends to be recession and inflation resistant, XAR is a defensive growth play that also serves double-duty as a hedge.

The surest way to make money over the long term is to tap megatrends with momentum, and ever-bigger defense budgets are a fact of existence that will probably never go away, even under the new Democratic administration of Joe Biden.

Military spending also is vital for national economies and job creation, which makes the defense sector an even more attractive investment proposition.

XAR’s portfolio boasts defense companies that are perennial recipients of Pentagon largesse. Lockheed Martin (LMT) is the largest defense contractor in the world. Lockheed manufactures a host of military aerospace products for the Pentagon and international clients.

Lockheed’s cash cow is the advanced F-35 Joint Strike Fighter, the most advanced combat jet fighter ever built. More than 2,443 of the planes are on order and about 65 already have been built, at a cost of $84 billion.

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Lockheed also makes the F-16, which is the world’s most sought-after combat jet. Countries currently lining up for more F-16s include Turkey, Taiwan and Indonesia, among others.

Boeing (BA) manufactures the fighter jets and drones that enjoy consistent demand from the Pentagon and foreign nations. Boeing confers diversification through its commercial division. In addition to stalwarts such as the 737 and 747, Boeing continues to win big orders for its Dreamliner. I expect this ETF to thrive in 2021 and beyond.

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