Butter ETFs or Guns ETFs?

With a new administration coming to Washington, a debate has emerged over which class of ETFs will benefit from all of the promised new spending – butter or guns?

SmartMoney’s Paulette Miniter argues for guns in the article Military Contractors May Thrive Under Obama.

Her case? The aerospace and defense sector has actually done better during Democratic administrations, according to a recent Merrill Lynch report. In addition, national security stocks are a good hedge against losses in the broader market in a recession. For example, the sector has beat the S&P 500 index by an average 17% in the past two recessions.

Miniter highlights two ways to gain exposure to the Defense sector with ETFs – the iShares Dow Jones US Aerospace & Defense Fund (ITA) and the PowerShares Aerospace & Defense Portfolio (PPA).

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