VettaFi defense ETF article uses Invesco PPA and its SPADE Defense Index

VettaFi published an Oct. 22 defense ETF article whose example, Invesco Aerospace & Defense ETF (PPA), tracks the SPADE Defense Index that VettaFi provides and for which VettaFi discloses an index licensing fee.

A disclosure at the foot of the piece, inside the Investing in Defense Content Hub, which the disclosure describes as authored and owned by VettaFi, states that VettaFi is the index provider for PPA and receives an index licensing fee. It also states that PPA is not issued, sponsored, endorsed or sold by VettaFi, and that Invesco Distributors is unaffiliated with VettaFi. The article argues that once an investor decides on defense exposure, index construction is what separates one ETF from another.

The construction the article describes is a modified cap-weighted index with a hard ceiling: no single stock may exceed 10% of the SPADE index's portfolio weight. Weights have to sum to 100%, so that rule implies at least ten constituents.

The article's case for the ceiling is concentration risk: some defense ETFs lean heavily on a handful of names. That approach works while those stocks work, and if they falter the fund suffers. A capped, cap-weighted index, in the article's telling, can lean into major defense and homeland-security companies without being beholden to them.

A 10% ceiling is a limit, not a target: it tells an advisor where concentration stops, not how much of the portfolio sits in the top five or ten names. The cap also trims the largest positions relative to their market weights, limiting damage when a defense leader stumbles but also limiting participation when it runs. Comparing defense ETFs on construction requires more than the ceiling: holding count and rebalance schedule do as much work as the cap itself.