3 Best Defense ETFs as U.S. Navy Begins Hormuz Blockade

President Donald Trump announced that the U.S. Navy will begin blockading ships linked to Iran. The plan targets vessels entering or leaving Iranian ports, including those in the Arabian Gulf and Gulf of Oman. Trump also warned that ships that previously paid tolls to Iran could be stopped even in international waters. Unsurprisingly, the strategy is to pressure Iran to reopen the Strait of Hormuz, where 20% of the world’s oil supply passes through. However, the risks are significant, and investors may want to hedge against a military escalation with the following defense ETFs:

• Invesco Aerospace & Defense ETF (PPA)
• iShares U.S. Aerospace & Defense ETF (ITA)
• SPDR S&P Aerospace & Defense ETF (XAR)

Indeed, experts say that a naval blockade is effectively an act of war and would require a large and ongoing military commitment. At the same time, key details remain unclear, such as how many ships or aircraft will be involved and whether allies will participate. This uncertainty raises difficult questions, especially around how the U.S. would respond if ships tied to major economies like China or partners such as India attempt to pass through. As a result, analysts warn that even enforcing the blockade could quickly lead to a wider conflict.

In addition, the threat of retaliation from Iran is growing, which adds another layer of risk. Military experts believe that Iran could respond by attacking ships in the Gulf or by targeting infrastructure in nearby countries that host U.S. forces. So far, tensions have already pushed global oil prices up sharply since the conflict began, and further escalation could keep prices elevated.

Which Defense ETF Is the Better Buy?

Turning to Wall Street, out of the three ETFs mentioned above, analysts think that XAR has the most room to run. In fact, XAR’s price target of $330.26 per share implies 21% upside potential.