The Best Aerospace & Defense ETFs for Canadian Investors
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Ethical hang-ups aside, there are plenty of valid, if somewhat morbid reasons to be bullish on the aerospace and defense sector.
Ongoing conflicts in Eastern Europe and the Middle East, multibillion-dollar contract backlogs for major Department of Defense prime contractors, an increasingly polarized geopolitical environment, and the fact that many of these firms are also riding the wave of tech innovation and deployment all support the case.
Until recently, Canadian investors had few options. If you wanted exposure to this theme, you had to buy a U.S.-listed ETF, which meant dealing with currency conversion and potential tax inefficiencies. That gap is finally closing.
Thanks to iShares Canada and Global X ETFs Canada, investors now have two domestic choices for owning global defense and aerospace stocks. Here's a look at both.
iShares U.S. Aerospace & Defense Index ETF (XAD)
XAD was the first of its kind to launch on the TSX, debuting on September 6, 2023. It tracks the Dow Jones U.S. Select Aerospace & Defense Index. It’s essentially a Canadian-domiciled carbon copy of the long-running iShares U.S. Aerospace & Defense ETF (ITA), which dates back to May 2006.
It gets the job done. The fund holds a portfolio of 36 U.S. aerospace and defense firms, weighted by market cap. But it’s extremely top-heavy. GE Aerospace and RTX Corp alone make up 19.49% and 15.16% of the portfolio, respectively.
The 0.44% MER isn’t cheap, but it’s fair for a narrow industry-specific ETF. That said, I’m lukewarm on this one. With only $33 million in assets under management so far, I’m not fully convinced about its long-term viability.
Global X Defence Tech Index ETF (SHLD)
A better option in my view is the newly launched SHLD, which debuted at the end of April 2025. Like XAD, it’s a Canadian-domiciled clone of a U.S. ETF—in this case, the Global X Defense Tech ETF (SHLD). The Canadian version simply wraps the U.S. fund using an ETF-of-ETF structure, down to the same ticker and name.
SHLD tracks the proprietary Global X Defense Tech Index and holds 37 companies. What sets it apart from XAD is its global diversification. No disrespect to the U.S., but Europe is where a lot of the defense industry growth is happening right now, spurred by Trump’s comments on NATO and new tariffs.
This ETF taps into that trend with holdings like Rheinmetall, Thales SA, Leonardo SPA, and BAE Systems—names you won’t find in XAD. It charges a 0.49% management fee, and while the MER isn’t published yet since it’s too new, it will likely land around 0.55% based on similar ETFs.
SHLD Versus ITA
The Canadian versions of SHLD and ITA will naturally show different returns over time due to currency fluctuations, but their U.S. counterparts provide enough history to draw meaningful comparisons—bearing in mind, of course, that past performance doesn’t guarantee future results.
From September 13, 2023 to May 2, 2025, SHLD outpaced ITA by a wide margin, delivering a 60.78% compound annual growth rate (CAGR) versus 28.03% for ITA. SHLD also exhibited lower drawdowns and less volatility.

The outperformance largely stems from its inclusion of European defense contractors, which went on a tear in early 2025 thanks to ramped-up regional defense spending and policy shifts.
Meanwhile, ITA’s U.S.-only portfolio ran into headwinds, especially after Elon Musk’s Department of Government Efficiency (DOGE) floated the possibility of cutting defense budgets.
In any case, SHLD is my pick. Despite both ETFs sharing exposure to 12 overlapping holdings—33.3% of SHLD's 37 holdings and 36.4% of ITA's 36 holdings—I think the global diversification and timely positioning of SHLD give it the edge.