Defense stocks are back in the spotlight as global military spending rises and geopolitical risks remain high. For investors who want exposure without picking individual stocks, defense-focused ETFs provide a diversified option in 2026. Using TipRanks’ Best Defense ETFs tool, we’ve identified two ETFs with over 20% upside potential in the year ahead.
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For context, a defense ETF (exchange-traded fund) invests in companies connected to the defense and military sector. These funds typically include firms that manufacture weapons, aircraft, missiles, and other military equipment.
Let’s look at the details.
ARK Space Exploration & Innovation ETF (ARKX)
The ARK Space Exploration & Innovation ETF is built to give investors exposure to the fast-growing space industry. Run by Cathie Wood’s ARK Invest, the fund focuses on innovative companies that could play a major role in how space is explored and used in the future. The fund has a higher expense ratio of 0.75%.
ARKX holds 34 stocks totaling $1.07 billion in assets, with the top 10 holdings making up 63.35% of the fund. Key Holdings include Rocket Lab (RKLB), L3Harris Technologies (LHX), and Kratos Defense & Security (KTOS).
Looking ahead, according to TipRanks’ unique ETF analyst consensus, determined based on a weighted average of analyst ratings on its holdings, ARKX is a Moderate Buy with over 23% upside potential. Currently, ARKX’s top three holdings with the highest upside potential are Strata Critical Medical (SRTA) at 104%, Joby Aviation (JOBY) at 86%, and Archer Aviation (ACHR) at 76%.
SPDR S&P Kensho Future Security ETF (FITE)
SPDR S&P Kensho Future Security ETF tracks the S&P Kensho Future Security Index, which includes U.S. and global companies developing tools to protect digital systems, physical infrastructure, and national security. The ETF focuses on areas like cybersecurity, defense technology, border security, and advanced data protection.
Compared to ARKK, FITE has a lower expense ratio of 0.45%. Meanwhile, the fund holds around 79 stocks with assets worth $115.67 million. Key names include Planet Labs (PL), Red Cat Holdings (RCAT), Redwire Corporation (RDW), and RKLB.
Looking ahead, according to TipRanks’ unique ETF analyst consensus, determined based on a weighted average of analyst ratings on its holdings, FITE is a Moderate Buy with 22.54% upside potential. Currently, ARKX’s top three holdings with the highest upside potential are Gorilla Technology (GRRR) at 178%, Rubrik (RBRK) at 104%, and Kopin (KOPN) at 71%.
