The U.S. Department of War recently signed a landmark framework agreement with Lockheed Martin LMT to rapidly scale the production and delivery of the AIM-260 Joint Advanced Tactical Missile (“JATM”). Executed as part of a broader government strategy to strengthen national missile supplies, this agreement establishes a multi-year procurement pathway that sends clear, long-term demand signals across the entire military industrial base, especially for missile manufacturers.
Consequently, defense stocks — ranging from prime system integrators to sub-tier component suppliers — stand to benefit directly from this framework via expanded production lines, high-margin Foreign Military Sales (“FMS”) and institutional investor interest.
For investors seeking lower-risk exposure to this multi-year growth cycle, defense-focused exchange-traded funds (ETFs) offer a balanced path forward. These funds allow investors to capture steady revenue gains across the broader missile supply chain without taking on single-stock concentration risk.
With production ramp-ups now formally in view, understanding the strategic mechanics of how important the JATM program is and why this framework serves as a massive catalyst for the broader U.S. missile supply chain is crucial for making an informed decision.
The Strategic Role of JATM in U.S. Air Dominance
The AIM-260 JATM is the centerpiece of next-generation American air-to-air combat strategy. Developed to replace the legacy AIM-120 AMRAAM, the JATM offers significantly extended range, advanced signal processing, and superior lethality against peer and near-peer air threats.
Under the Trump administration's "Arsenal of Freedom" framework, accelerating JATM production is not simply a single-weapons program upgrade — it is the cornerstone of rebuilding deep-magazine war reserves. The Pentagon’s multi-year purchasing commitments provide LMT with the financial certainty to expand facilities, scale its workforce and strengthen the missile’s supply chain.
The Framework’s Role in Boosting U.S. Missile Supply Chain
While Lockheed Martin serves as the lead prime contractor for JATM, the benefits of this framework could extend across the broader defense industry, creating revenue opportunities for other defense stocks like those mentioned below.
For instance, Northrop Grumman NOC is a key provider of advanced solid rocket motors (SRMs), warheads, and sensor technologies required for long-range tactical missiles. It has delivered more than 1 million tactical SRMs. NOC’s motors power major interceptor and tactical missile families, including the Standard Missile (SM), Precision Strike Missile and PAC-3 MSE.
Then there is RTX Corporation RTX, the legacy manufacturer of the Advanced Medium-Range Air-to-Air Missiles (“AMRAAM”), as well as SMs and Tomahawk Cruise missiles. It also supplies secondary radar and guidance components across joint missile programs. RTX is currently working with the U.S. government and NATO allies to scale production of AMRAAM to at least 1,900 units per year.
Other defense contractors worth mentioning as major beneficiaries of the framework are Boeing BA and General Dynamics GD. Boeing builds and maintains navigation systems for the U.S. Navy's Trident submarine missiles and supports the guidance systems for land-based Minuteman III missiles. General Dynamics provides critical missile energetics and structural components.
This interconnected ecosystem means that as the government accelerates missile production, the benefits can extend across various tiers of the defense industry.
Geopolitical Tensions Create a Multi-Year Defense Catalyst
Recent global security crises have highlighted a stark reality: modern high-intensity warfare depletes precision munitions at an unprecedented rate. Notably, ongoing conflict between Russia and Ukraine, heightened direct friction between the United States and Iran, and continuous maritime disruption from Houthi attacks in the Red Sea have severely strained global weapon stockpiles.
These persistent threats are forcing nations globally to transition from "just-in-time" procurement to "just-in-case" stockpiling, particularly for missiles. With America being the largest weapons exporter, this structural shift is creating a prolonged bullish cycle for defense manufacturing, particularly those based in the United States, making defense equities a compelling hedge against geopolitical risk.
Top Defense ETFs for You
Considering the discussion above, investors seeking diversified exposure to the JATM ramp-up and broader missile-stockpiling spending can consider the following ETFs:
iShares U.S. Aerospace & Defense ETF ITA
This fund, with net assets worth $12.54 billion, offers exposure to 48 U.S. aerospace and defense companies, including manufacturers of commercial and military aircraft. GE Aerospace holds the first spot in this fund, with 21.51% weightage, while RTX holds the second spot with 17.14% weightage. BA, GD and LMT hold the third, fourth and fifth spots in this ETF, with 9.18%, 4.94% and 4.85% weightage, respectively.
ITA has gained 5.2% over the past year and charges 37 basis points (bps) in fees. It traded at a good volume of 1.05 million shares in the last trading session and holds a Zacks ETF Rank #2 (Buy).
Invesco Aerospace & Defense ETF PPA
This fund, with a market value of $7.63 billion, offers exposure to 62 companies involved in the development, manufacturing, operations and support of U.S. defense, homeland security and aerospace operations. RTX holds the first spot in this fund, with 8.14% weightage, while BA holds the second spot with 6.82% weightage. LMT, GD and NOC hold the fourth, fifth and sixth spots, with 6.73%, 5.02% and 5.01% weightage, respectively.
PPA has rallied 5.7% over the past year and charges 58 bps in fees. It traded at a volume of 0.22 million shares in the last trading session and holds a Zacks ETF Rank #2.
State Street SPDR S&P Aerospace & Defense ETF XAR
This fund, with assets under management (AUM) worth $6.13 billion, offers exposure to 47 aerospace and defense companies. RTX holds the first spot in this fund, with 3.31% weightage, while GD holds the third spot with 3.16% weightage. LMT holds the fourth spot with 3.11% weightage, while NOC holds the ninth position with 2.93% weightage.
XAR has risen 6.3% over the past year and charges 35 bps in fees. It traded at a volume of 0.16 million shares in the last trading session and holds a Zacks ETF Rank #2.
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The Boeing Company (BA): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
Northrop Grumman Corporation (NOC): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports
Invesco Aerospace & Defense ETF (PPA): ETF Research Reports
State Street SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports
RTX Corporation (RTX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).