Designed to provide broad exposure to the Industrials ETFs category of the market, the SPDR S&P Aerospace & Defense ETF (XAR) is a smart beta exchange traded fund launched on 09/28/2011.What Are Smart Beta ETFs?For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.Fund Sponsor & IndexThe fund is managed by State Street Global Advisors. XAR has been able to amass assets over $1.32 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the S&P Aerospace & Defense Select Industry Index before fees and expenses.The S&P Aerospace & Defense Select Industry Index represents the aerospace & defense sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Aerospace & Defense Index is a modified equal weight index.Cost & Other ExpensesExpense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.It has a 12-month trailing dividend yield of 0.52%.Sector Exposure and Top HoldingsMost ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.This ETF has heaviest allocation in the Industrials sector - about 100% of the portfolio.Taking into account individual holdings, Rocket Lab Usa Inc. (RKLB) accounts for about 4.24% of the fund's total assets, followed by Axon Enterprise Inc (AXON) and Boeing Company (BA).Its top 10 holdings account for approximately 38.41% of XAR's total assets under management.Performance and RiskYear-to-date, the SPDR S&P Aerospace & Defense ETF has lost about -7.19% so far, and is down about -4.81% over the last 12 months (as of 12/07/2022). XAR has traded between $91.68 and $126.95 in this past 52-week period.The ETF has a beta of 1.11 and standard deviation of 33.43% for the trailing three-year period, making it a medium risk choice in the space. With about 36 holdings, it has more concentrated exposure than peers.AlternativesSPDR S&P Aerospace & Defense ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.Invesco Aerospace & Defense ETF (PPA) tracks SPADE Defense Index and the iShares U.S. Aerospace & Defense ETF (ITA) tracks Dow Jones U.S. Select Aerospace & Defense Index. Invesco Aerospace & Defense ETF has $1.72 billion in assets, iShares U.S. Aerospace & Defense ETF has $4.41 billion. PPA has an expense ratio of 0.58% and ITA charges 0.39%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports The Boeing Company (BA): Free Stock Analysis Report Axon Enterprise, Inc (AXON): Free Stock Analysis Report iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Invesco Aerospace & Defense ETF (PPA): ETF Research Reports Rocket Lab USA, Inc. (RKLB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research