An old-economy sector fund is quietly beating the market darlings this year, and it holds zero shares of the electric-vehicle giant everyone loves to argue about. The iShares U.S. Aerospace & Defense ETF (NYSEARCA:ITA) has climbed 13.74% year to date and 32.48% over the trailing year, all while owning none of the Magnificent Seven, including Tesla (NASDAQ:TSLA | TSLA Price Prediction). Over the same year-to-date stretch, Tesla shares have fallen 12.51%.
What ITA Actually Owns
ITA is BlackRock’s iShares fund tracking large- and small-cap U.S. companies in the aerospace and defense industry. As of March 31, 2026, the fund managed $13.49 billion in net assets spread across 47 holdings. The portfolio is heavily concentrated at the top: the ten largest positions represent roughly 64% of assets.
The top three names alone drive the fund. GE Aerospace sits at 19.03%, RTX at 16.55%, and Boeing at 8.91%. Behind them: General Dynamics at 4.77%, L3Harris at 4.66%, Lockheed Martin at 4.58%, Northrop Grumman at 4.58%, TransDigm at 4.53%, and Howmet at 4.50%.
Why the Fund Is Running
Defense primes have benefited from a step-change in federal budget authority. The FY 2027 President’s Budget request for the Department of the Air Force alone reaches $391.1 billion, and procurement lines for major weapons systems are expanding, with the F-35 program alone jumping to a $21.4 billion request for FY 2027. Commercial aerospace has added its own tailwind through Boeing’s production ramp and record engine-services demand at GE Aerospace and RTX.
Growth-oriented names inside the fund have amplified the move. Axon Enterprise sits at 2.83%, Rocket Lab at 2.55%, and Kratos Defense at 1.10%. Goldman Sachs flagged economic security as a prominent 2026 theme, and this fund is a direct expression of it.
The Tesla Question
Tesla is not in the fund’s 47 holdings as of the most recent NPORT filing. The reason is methodology, not opinion. ITA tracks a sector-focused index limited to aerospace and defense classifications. Tesla, at a $1.48 trillion market cap, is categorized under consumer discretionary and automotive. Its rockets are at SpaceX, a separate private company. The index simply has no lane for it.
That exclusion has helped this year. Tesla trades at a price-to-earnings ratio of 421, and the stock is down 12.51% year to date despite a 14.14% Q1 earnings beat on $22.39 billion in revenue. Broad tech-adjacent volatility that has dragged Magnificent Seven names lower has bypassed ITA entirely.
What the Absence Means for Risk
Funds that hold Tesla, including most total-market and consumer discretionary ETFs, have carried the drag from its year-to-date decline. ITA has skipped that hit but taken on a different concentration risk: three companies (GE Aerospace, RTX, Boeing) account for roughly 44.5% of the portfolio. A production stumble at Boeing or a Pentagon continuing-resolution fight could reverse the trend quickly.
The fund also skews cyclical. Over five years, ITA has returned 130.85%, and over ten years, 330.57%. Those numbers include long stretches when defense budgets were less generous and aerospace was grounded during the pandemic.
The Takeaway
For retirement-focused investors weighing a sector allocation, ITA offers direct exposure to a policy-driven earnings cycle without wagering on high-multiple consumer tech. That is the trade-off: no Tesla upside if the stock rebounds, but no Tesla drawdown either. Past performance doesn’t guarantee future results, and this article is not investment advice. Anyone considering a position should weigh the fund’s concentration in a handful of prime contractors against the defense-spending backdrop that has powered its 6.14% trailing-month and double-digit year-to-date gains.
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