The world's getting pretty tense right now. Middle East conflicts, Russia-Ukraine war, US-China tensions over Taiwan - it's creating serious demand for defense spending globally. This is actually opening up some solid opportunities if you know where to look in the defense sector.

I've been comparing three major defence ETF options that keep popping up in conversations: XAR, ITA, and PPA. All three have solid Smart Score ratings, but they're definitely not created equal.

Let me break down what I'm seeing. XAR is the SPDR play - $2.3 billion fund with 33 holdings. It's got companies like Lockheed Martin and HEICO in there, and honestly the portfolio quality is impressive. Seven of its top 10 holdings have strong Smart Scores. The expense ratio is reasonable at 0.35%, and over the past decade it's done 13.3% annualized. Not bad, but here's the thing - the three-year returns were only 6.3%. That's where it starts to feel underwhelming compared to what else is out there.

Then there's ITA from BlackRock. Similar holdings to XAR, also with seven top holdings showing strong scores. But I'm not thrilled about this one. It's got a 9.3% position in Boeing, which has been a drag on performance. The fund's less diversified too - top 10 holdings make up 76.6% of assets. Three-year returns were 7.4%, five-year at 5.4%. Wall Street likes it, but the numbers don't excite me much.

Now PPA - this is where things get interesting. Invesco's defence ETF with 54 holdings, so better diversification. But more importantly, look at the performance. Three-year annualized return of 14.3%? That's crushing both competitors and beating the S&P 500's 9.5% over the same period. Five-year it's 11.6% versus XAR's 8.6% and ITA's 5.4%. Over a decade, PPA hit 14.6% while the broader market did 13.1%.

Yes, the expense ratio is higher at 0.65% versus 0.35% for the others. But when you're consistently outperforming by that much, you're paying for actual results, not just fees.

If you're looking for exposure to the defence sector right now, PPA looks like the strongest pick. Better performance track record, solid portfolio quality, and it's actually beaten the market over the long term. The geopolitical situation isn't getting safer, so this defence ETF positioning makes sense for diversification. I'm watching this space closely, and PPA is the one I'd actually consider if I were building a position here.