ITA tracks a market-cap-weighted index of US-listed manufacturers, assemblers and distributors of aircraft and aircraft parts primarily used in commercial or private air transport and producers of components and equipment for the defense industry, including military aircraft, radar equipment and weapons. The fund caps its holdings to meet diversification requirements, limiting a single company to 22.5% of the funds assets, and preventing completely unbiased exposure to the top few that dominate the industry. Concentration risk remains high despite the caps, reflecting the undiversified nature of the industry. Despite this, ITA still allocates holdings to a mixture of large, mid, and small-cap companies. The fund uses a representative sampling strategy instead of replicating the underlying index. The index is rebalanced quarterly.
