The U.S. defense and homeland security sectors continue to see strong gains despite the slowing economy, according to a release.
The benchmark SPADE Defense Index has a year-to-date gain of 21.5%, nearly 20% better than the Standard & Poor's 500 Index.
Since 2000, the SPADE index has produced a total cumulative gain of 159.8% compared to the S&P's 10.2% and the Russell 3000's 5.9% and has outperformed the S&P by more than 19% in four of the last five years.
"Although much of the gains can be attributed to government spending in the aftermath of 9/11 and the war in Iraq, the defense sector's positive performance predates the 9/11 attack on the U.S., and trends suggest that growth may continue even after a pullback from Iraq occurs," said Scott Sacknoff, president of
"Current economic issues related to the subprime loan crisis, inflation, and the possibility of recession tend to have less of a direct impact on the defense sector which derives much of its revenues from government budgets," he said. "While the sector may move in sympathy with the overall market at times, the underlying factors driving the defense industry remain quite different."
The defense sector is in the midst of a long investment cycle, and its companies generate nearly 5% of the U.S. GDP, he said.
"As always, politics remains the biggest risk to the sector," Sacknoff said.
