Why Midterm Changes Shouldn’t Dent Defense Stocks

Now that the 2026 U.S. midterm elections are winding down, investors and advisors are focusing on how a change in congressional control will affect certain sectors and industries.Key Takeaways: As the 2026 midterms end, many wonder how shifting congressional control will affect the defense industry. However, the defense industry still benefits from restocking munitions, technological innovations, and strong global sales. Investors and advisors looking to capture long-term defense exposure might consider the Invesco Aerospace & Defense ETF (PPA A-). One industry likely to come under the microscope is defense. After all, defense spending has been a hot topic ever since conflict in Iran erupted earlier this year. But with Democrats now in control of the U.S. Congress, many wonder how defense spending may shift. To be frank, the most likely answer is that there won’t be much change at all. Historically, a divided government rarely makes a significant dent in top-line defense spending. See More: 4Q26 Defense Sector Guide – Opportunities Amid Instability Think of it this way: even if pressure mounts to de-escalate and exit Iran, the conflict has already burned through key munition stockpiles at significant rates. Replacing precision-guided weapons, air defense interceptors, and other major weapons requires multi-year procurement processes. The replenishment will continue far beyond the end of the conflict itself. Furthermore, multiple factors beyond Iran drive the defense industry pipeline. Defense technology is ever-evolving, and demand to build defense stockpiles is also based on deterrence and foreign military sales. Ultimately, defense investing is a play on long-term innovation and global demand, not a near-term geopolitical trend.A Prime Moment for PPAPutting this all together, targeted defense exposure may make a great deal of sense as a long-term play and portfolio diversifier. One defense fund that may be worth considering is the Invesco Aerospace & Defense ETF (PPA A-). See More: 1 Year of DRNZ: A Closer Look at Defense ETFs PPA uses the SPADE Defense Index to provide measured exposure to U.S. defense, space, homeland security, military, and national security operations. The index employs a modified cap-weighting methodology, which helps provide diversification and limits how heavily a singular company can affect PPA’s performance. Going forward, leaning into a more diversified take on defense investing can help investors and advisors capitalize on the opportunities within this industry. With significant long-term opportunities and a strong potential spending pipeline, the defense sector and its subsequent ETFs shouldn’t be overlooked in the coming months. For more news, information, and analysis, visit the Investing in Defense Content Hub.DisclosuresVettaFi LLC (“VettaFi”) is the index provider for PPA, for which it receives an index licensing fee. However, PPA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of PPA. Invesco Distributors, Inc. is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Invesco Distributors, Inc., nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles. Invesco Distributors, Inc. does not provide legal or tax advice. This information is provided for general educational purposes only and is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements.