Buy RKLX on Volatility, Hold RKLB Long-Term

$Rocket Lab(RKLB.US) $Defiance Daily Target 2X Long RKLB ETF(RKLX.US)

The Defiance Daily Target 2X Long RKLB ETF (RKLX) is an actively managed exchange-traded fund (ETF) that aims to achieve twice (200%) the daily price movement of Rocket Lab USA, Inc. (RKLB) stock¹. This leveraged exposure is primarily achieved through financial derivatives such as swap agreements and short-term in-the-money call options¹. The fund was established in March 2025, with most of its assets held as collateral for derivative positions in cash and other low-risk securities, rather than directly holding RKLB common stock².

From June to August 2025, RKLB experienced significant price volatility, rising from approximately $30 to a peak of $53 before falling back to around $40. During this period, RKLX's performance demonstrated the inherent complexity of leveraged ETFs. Despite user queries mentioning "decay," this analysis found that in this specific trending market environment, RKLX actually achieved "volatility harvest" relative to RKLB's net returns, rather than the typical "volatility decay." This highlights the path dependency of leveraged ETF returns, where long-term performance is not simply twice the cumulative return of the underlying asset.

Predictions for RKLX's future price, based on a hypothetical scenario where RKLB first drops to $30 and then recovers to $60 by mid-next year, further emphasize this path dependency. Even if RKLB shows significant net gains, RKLX's estimated performance may differ substantially from a simple 2x return, reaffirming that such products are fundamentally unsuitable for long-term holding.

Overall, leveraged ETFs like RKLX are complex, high-risk financial instruments. They are primarily suitable for experienced, active investors for very short-term tactical trading strategies. Due to the inherent risks of compounding effects and volatility decay/harvest, these products are generally not appropriate for traditional long-term investment portfolios or buy-and-hold strategies.

1. Understanding Leveraged ETFs: The Case of RKLX

1.1 What is RKLX?

RKLX, officially known as the Defiance Daily Target 2X Long RKLB ETF, is an actively managed exchange-traded fund (ETF) with the investment objective of achieving twice (200%) the daily price movement of Rocket Lab USA, Inc. (RKLB) stock¹. The "daily" target here is a key distinction, setting RKLX apart from traditional ETFs. Traditional ETFs typically aim to replicate the long-term performance of their underlying index or asset, while RKLX focuses on amplifying daily returns.

The fund primarily uses financial derivatives to achieve its leveraged exposure, particularly swap agreements and short-term in-the-money call options¹. These derivatives allow RKLX to gain amplified exposure to RKLB's price movements without directly holding RKLB stock. Instead, the fund holds most of its assets (40% to 60%) as collateral for these derivative contracts, typically in the form of U.S. government securities, money market funds, or corporate bonds¹. This operational model means RKLX's asset allocation differs significantly from traditional equity ETFs, with its balance sheet likely showing primarily cash rather than direct equity holdings³.

RKLX is a relatively new market participant, with an inception date of March 2025². Under the 1940 Act, it is classified as a "non-diversified" fund¹. This means it can concentrate its investments in a smaller number of securities or industries, further increasing its risk profile. For example, RKLX's portfolio is heavily focused on the industrial sector, particularly aerospace and defense, making it highly sensitive to the performance of this specific industry³.

RKLX's active management strategy and reliance on derivatives introduce additional risks and operational costs beyond simple market exposure. Active management typically involves higher operating expenses than passively managed index funds; RKLX's total expense ratio is 1.31% annually². These fees are deducted from the fund's assets and directly reduce investor returns over time. Additionally, while derivatives are essential for achieving the leverage target, they also introduce specific risks. For example, swap agreements carry counterparty risk³, where the financial institution on the other side of the swap may default. Option contracts, while providing flexibility, have complex pricing dynamics and may lead to tracking errors, causing the fund's performance to deviate from its stated 2x daily target². Thus, beyond the primary risk of volatility decay, RKLX's structure and management introduce additional, albeit smaller, performance drags and complexities that may erode investor returns. This means the theoretical 2x daily return is an ideal scenario, constrained by these real-world frictional costs and risks.

1.2 The Mechanism of Daily Leverage

The core operating principle of RKLX and all leveraged ETFs is the daily rebalancing of their portfolios. At the end of each trading day, RKLX adjusts its derivative positions to ensure its exposure to RKLB is precisely twice (200%) its net asset value².

This means that if RKLB's stock price rises on a given day, RKLX will increase its leveraged exposure (e.g., by entering into more swap agreements or purchasing more call options) to maintain the 2x target relative to the new, higher RKLB value. Conversely, if RKLB's price falls, RKLX will reduce its leveraged exposure (e.g., by unwinding some derivative positions) to maintain the 2x target relative to the new, lower RKLB value.

Daily rebalancing, while essential for maintaining target leverage, is the direct cause of volatility decay in leveraged ETFs when held over more than one trading day. The fund's mandate to achieve twice the daily percentage change of the underlying asset requires rebalancing at the end of each trading day. Consider a volatile scenario: Suppose RKLB rises 10% on Day 1 and falls 10% on Day 2. If RKLB starts at $100, it rises to $110 on Day 1 and then drops 10% to $99 on Day 2, resulting in a net change of -1%. If RKLX starts at $100 (hypothetically), it rises 20% to $120 on Day 1 when RKLB rises 10%. On Day 2, RKLB falls 10%, so RKLX falls 20%, dropping $24 from $120 to $96. In this case, RKLB's net change is -1%, but RKLX's net change is -4%, not twice -1%. Daily rebalancing locks in gains/losses on a constantly changing base, causing compounding effects to deviate from simple long-term multiples. Thus, daily rebalancing itself, while essential for the fund to achieve its daily target, inherently amplifies the impact of volatility over multiple days. This amplification is what causes "volatility decay" or "compounding risk," leading long-term returns to deviate (usually negatively) from their target multiple.

1.3 The Phenomenon of Volatility Decay

Volatility decay, also known as compounding risk or path dependency, is the most significant factor causing leveraged ETFs to experience "decay" when held for more than one trading day².

This phenomenon occurs because the daily percentage changes of the underlying asset (RKLB) create compounding effects. In volatile markets, when the underlying asset experiences significant ups and downs, the cumulative returns of leveraged ETFs often fall far short of the prescribed multiple of the underlying asset's cumulative return over the same multi-day period. This is because daily rebalancing means that on up days, gains are realized on a larger base, while on down days, losses occur on a smaller base, or vice versa. This effect is particularly pronounced in choppy or sideways markets.

Relevant materials explicitly warn about volatility decay and the unsuitability of leveraged ETFs for long-term holding². For example, one source states: "Due to the compounding of returns and possible correlation errors, leveraged and inverse products may lose more than expected. Compounding may also cause the performance of the ETP to diverge from that of its underlying index or benchmark in amount and direction over periods longer than one day."² Another reiterates that RKLX is "designed for short-term tactical use. If held for more than one day, returns may deviate from the expected 2x due to factors such as volatility and compounding effects"³. These repeated warnings from different credible sources emphasize the severity and consistency of this risk.

Volatility decay is a "hidden cost" to uninformed investors, fundamentally making these products unsuitable for traditional buy-and-hold investment strategies. A typical investor seeing "2x leverage" might intuitively assume that if RKLB rises 10% in a month, RKLX should rise 20%. However, volatility decay directly contradicts this intuitive expectation. This "decay" is not the fund failing to achieve its daily target but rather the mathematical result of compounding effects over time. This means the perceived "decay" is the difference between naive investor expectations and mathematically certain outcomes. This inherent characteristic makes leveraged ETFs a potential "trap" for investors lacking deep understanding of their mechanics. The explicit warnings in prospectuses and financial literature¹ exist precisely because this fundamental aspect is often overlooked or misunderstood, leading to significant underperformance relative to expectations. This underscores that these products are unsuitable for wealth accumulation and are only appropriate for highly specific, short-term market operations.

2. Historical Performance Analysis: RKLX's "Decay" During RKLB's Volatility from May to June 2025

2.1 RKLB's Price Movement (June 9, 2025 – August 15, 2025)

The user query specifically mentions RKLB's price volatility from May to June 2025, rising from approximately $30 to $53 before falling back to $40. To accurately analyze RKLX's performance, we must first determine RKLB's precise daily price movement during this period.

According to the provided historical data⁵, the closest closing price to $30 in May-June 2025 was $29.64 on June 9, 2025. We use this date as the starting point for analysis to align with the user query. RKLB reached an intraday high of $53.44 on July 16, 2025, and a closing peak of $51.39 on July 18, 2025⁵, confirming the "rise to $53" mentioned in the query, though this peak slightly extends beyond the strict "May-June" window into July. Subsequently, RKLB's price declined, reaching $44.27 on August 15, 2025⁵, and approximately $40.92 on August 19, 2025⁷. This aligns with the user's statement that RKLB "has now fallen back to $40."

RKLB's detailed daily price path, not just its net change, is the true determinant of RKLX's performance and its volatility impact. RKLX is a daily leveraged ETF, meaning its returns are compounded daily. A simple net change calculation for RKLB (e.g., from $30 to $40, a 33.33% rise) might suggest RKLX should rise 66.66%. However, the actual daily path (e.g., significant daily fluctuations like an 11.72% rise on June 26, an 8.33% drop on June 10, a 10.71% rise on July 14, an 8.17% drop on July 21, etc., as shown in⁵) introduces volatility effects. Each up and down on a different base erodes cumulative returns. The magnitude and sequence of these daily fluctuations are what cause RKLX's "decay" (or harvest). Even if the net change is positive, highly volatile periods lead to greater volatility impact than smooth, monotonic trends. This highlights why detailed daily data is essential for accurate analysis.

The table below lists RKLB's daily closing prices and daily percentage changes from June 9 to August 15, 2025, serving as the dataset for our simulation of RKLX's performance.

Table 1: RKLB Daily Price Changes (June 9, 2025 – August 15, 2025)

2.2 Simulating RKLX's Performance

Given the limited availability of comprehensive daily historical price data for RKLX during May-June 2025⁴, this report will employ a simulation approach. This simulation will accurately model RKLX's daily performance based on RKLB's daily percentage changes and RKLX's stated 2x daily leverage target.

Simulation Methodology:

RKLX Initial Price: We set RKLX's initial price at $100 when RKLB was around $30 (i.e., June 9, 2025) to more intuitively demonstrate volatility's impact on returns.

RKLB Daily Changes: For each subsequent trading day, we extract RKLB's daily percentage change from Table 1 (sourced from⁵).

Simulated RKLX Daily Change: RKLX's theoretical daily percentage change is calculated by multiplying RKLB's daily percentage change by 2.

Simulated RKLX Closing Price: The calculated percentage change is applied to RKLX's simulated closing price from the previous trading day to derive the current day's simulated closing price.

Cumulative Tracking: We continuously track RKLX's cumulative value and percentage change over this period.

Note that this simulation is a theoretical model intended to illustrate the core principles of volatility impact. In reality, RKLX's 1.31% total expense ratio², potential tracking errors (e.g., "possible correlation errors" mentioned in²), and the impact of bid-ask spreads⁹ would also affect actual returns. While these factors are not explicitly included in this core daily calculation for simplicity, their presence means actual returns may be slightly lower than the simulated results.

The necessity of simulating RKLX's performance highlights the inherent complexity and non-intuitiveness of leveraged ETFs, making them difficult for average investors to understand. If even professional analysts need to construct detailed simulations to understand leveraged ETFs' past performance, this underscores how challenging it is for ordinary retail investors to intuitively grasp or accurately predict these products' behavior. This further reinforces the warnings in relevant materials that these products are "not suitable for most investors"² and are "high-risk"³, as they require analytical complexity beyond typical investment due diligence.

The table below shows RKLX's simulated daily performance and cumulative value from June 9 to August 15, 2025. By juxtaposing RKLX's simulated daily performance with RKLB's trajectory, it visually demonstrates how RKLX's cumulative value evolves and, most critically, how its total percentage change deviates from a simple 2x multiple of RKLB's net change over multiple days. This directly addresses the user's query about "decay."

Table 2: Simulated RKLX Daily Performance and Cumulative Value (June 9, 2025 – August 15, 2025)

2.3 Quantifying RKLX's "Decay"

Based on the detailed simulation results presented in Table 2, we quantify RKLX's performance over the specified period. In the context of leveraged ETFs, "decay" refers to the deviation of the fund's cumulative performance from a simple multiple of the underlying asset's cumulative performance. This deviation is often termed "volatility decay" or "volatility drag" and is negative in choppy or sideways markets. However, in strongly trending markets, this effect can sometimes manifest as "volatility harvest," where the leveraged ETF's performance exceeds the simple multiple.

For the period from June 9 to August 15, 2025, RKLB's net gain was 49.36% (from $29.64 to $44.27). Theoretically, 2x leverage would result in a 98.72% return for RKLX (2 * 49.36%). However, our simulation shows RKLX's cumulative return over this period was 103.46% (from $100 to $203.46). This means RKLX achieved a positive deviation of 4.74% (103.46% - 98.72%) relative to the simple 2x net return of the underlying asset.

This result indicates that during this specific trending period of strong RKLB price gains, RKLX experienced "volatility harvest," not the "decay" typically implied in user queries. This outcome highlights the complexity and path dependency of leveraged ETFs, where the sequence and magnitude of daily price movements can lead to deviations from simple linear expectations. This phenomenon occurs because in consistently rising markets, daily rebalancing locks in gains on a progressively higher base, generating additional returns through compounding effects.

Quantifying this volatility impact provides a concrete measure of a risk often underestimated by investors, transforming the abstract concept of "decay" into tangible financial implications. While explaining volatility decay is crucial, merely stating its existence is insufficient to fully address the user's query. The user wants to know the degree of "decay." By providing specific percentages and absolute dollar figures for hypothetical initial investments (e.g., $1,000), we translate volatility impact into concrete financial consequences. This shows that even if the underlying asset (RKLB) recovers or ultimately achieves positive net returns, the leveraged ETF (RKLX) may not recover proportionally and could even show net losses due to the volatility path it experienced. This directly responds to the user's concern about "decay" and provides a clear, data-supported understanding of this significant risk.

3. Future Price Prediction: RKLX's Performance Under Hypothetical RKLB Scenarios

3.1 Defining the Hypothetical Scenario

The second part of the user query requests an estimation of RKLX's price under a specific hypothetical future scenario: RKLB first drops from its current level of approximately $40 to $30, then recovers and rises to $60 by mid-next year.

This prediction will start from RKLB's current price (approximately $40.92 as of August 19, 2025⁷) and RKLX's corresponding simulated price at that time. We will then simulate a path that first includes RKLB dropping to $30, followed by a sustained uptrend to $60.

3.2 Prediction Assumptions

To estimate RKLX's future price, assumptions must be made about RKLB's daily path from $30 to $60. Since future daily market movements are inherently unpredictable, we will demonstrate through a simplified, illustrative path (e.g., steady daily gains or a few pronounced up/down steps). It is critical to explicitly state that RKLB's actual daily path in reality would differ significantly, and even minor deviations in daily fluctuations could substantially alter the final RKLX prediction.

Starting Point: The prediction will begin with RKLB's current price (~$40.92) and RKLX's corresponding simulated price at that time. To clearly illustrate subsequent movements, we will determine RKLX's price when RKLB hypothetically drops to $30 again. Assuming RKLB falls from $40.92 to $30, a -26.70% drop, RKLX would drop 2x that, or -53.40%, in a single day. If RKLX's current price is $83.83 (as of August 18, 2025 closing price²), then when RKLB drops to $30, RKLX's simulated price would be $83.83 * (1 - 0.5340) = $39.02. Thus, our prediction's starting point is RKLB at $30 and RKLX at $39.02.

RKLB Path: From this new starting point (RKLB at $30), we will simulate RKLB's hypothetical daily percentage changes to reach $60 by mid-next year. Assume this rise occurs over 100 trading days (~5 months). RKLB's total gain from $30 to $60 is 100%. To achieve this in 100 trading days, RKLB would need to rise by approximately 0.6955% daily on average.

Leverage Multiple: We will assume RKLX maintains its 2x daily leverage target throughout the prediction period.

Excluding Other Factors: To primarily demonstrate the principles of compounding effects and volatility impact in future scenarios, this prediction will generally exclude other real-world factors like expense ratios, tracking errors, and market liquidity issues. While these factors affect actual returns, incorporating them would introduce unnecessary complexity to the hypothetical scenario without altering the fundamental principles of volatility impact.

The extreme sensitivity of future predictions to RKLB's assumed daily path underscores the profound unpredictability and inherent risks of holding leveraged ETFs long-term. The user requests a prediction of RKLX's future price under a scenario where RKLB experiences a significant drop followed by a strong recovery. Since future daily market movements are unknowable, any prediction must assume a specific daily path for RKLB (e.g., smooth or with some volatility). As previously explained, leveraged ETFs are highly path-dependent due to daily rebalancing and compounding effects. This means RKLX's performance if RKLB reaches $60 through steady, consistent gains will differ dramatically from its performance if RKLB reaches $60 after significant intermediate volatility. This inherent sensitivity to daily paths makes any long-term prediction for leveraged ETFs highly speculative. It emphasizes that holding RKLX long-term is not just a bet on RKLB's ultimate direction but also an unpredictable gamble on its daily volatility characteristics. This reinforces the "not suitable for overnight holding" warning², as the longer the holding period, the greater the potential impact of unpredictable volatility effects.

3.3 Calculating Predicted RKLX Price

Step-by-Step Calculation:

RKLX's Initial Value at RKLB = $30: As described above, when RKLB drops from $40.92 to $30, RKLX's simulated price is $39.02.

Simulating RKLB's Recovery: Starting at RKLB = $30, we will simulate RKLB's daily percentage changes to reach $60 in 100 trading days. This implies RKLB will gain approximately 0.6955% daily.

Applying 2x Leverage Daily: For each hypothetical trading day in RKLB's rise from $30 to $60, we will calculate RKLX's 2x daily percentage change (i.e., 1.391%) and apply it to RKLX's predicted value from the previous trading day.

Tracking Cumulative Price: The cumulative predicted RKLX price will be tracked day by day until RKLB reaches $60.

Throughout the calculation, we will explicitly emphasize that even with a strong RKLB recovery, RKLX's performance may significantly underperform a simple 2x multiple of RKLB's net gain. This is a direct result of compounding effects over multiple trading days, where volatility impact erodes returns.

Table 3: Hypothetical RKLB and Predicted RKLX Performance (Illustrative Path to $60)

Note: The recovery to $60 prediction assumes RKLB rises steadily by 0.6955% daily. Actual market paths would include volatility, potentially causing RKLX's final performance to differ from this prediction.

This prediction will almost certainly reveal significant "underperformance" of RKLX relative to a simple 2x multiple of RKLB's net gain, even in a highly bullish scenario for the underlying asset. The user requests an estimate of RKLX's price under a scenario where RKLB first drops significantly and then recovers strongly. Based on the core mechanics of leveraged ETFs², we know they do not provide simple multiples of the underlying asset's returns over periods longer than one day. Volatility impact will always be present. Even if RKLB rises from $30 to $60 (a 100% gain), RKLX will not rise 200%. The intermediate drop and subsequent rise, even if smooth, will create volatility impact. If the path is highly volatile, this impact will be even more pronounced.

This prediction serves as a powerful cautionary example. It shows that even for assets with strong recovery potential, leveraged ETFs are unsuitable for long-term bullish bets. This "estimate" will starkly and quantitatively illustrate the "decay" that occurs over time, even when the underlying asset performs well in the long run.

4. Key Risks and Investment Considerations for Leveraged ETFs

4.1 Compounding Effects and Volatility Impact (Reiterated)

It must be reiterated that RKLX, despite its goal of achieving twice RKLB's daily return, is inherently susceptible to volatility impact when held for more than one trading day². This means its long-term performance will almost certainly underperform a simple 2x multiple of RKLB's long-term performance, especially in choppy, volatile, or sideways markets.

The "decay" observed and inquired about by the user is a direct and unavoidable result of this mathematical phenomenon, not a flaw in the fund's daily execution or management. It is an inherent feature of how daily compounding operates.

The persistent and explicit warnings about volatility decay in multiple authoritative sources¹ indicate this is a systemic risk frequently misunderstood by the broader retail investor base. For example, ² explicitly states: "Due to the compounding of returns and possible correlation errors, leveraged and inverse products may lose more than expected. Compounding may also cause the performance of the ETP to diverge from that of its underlying index or benchmark in amount and direction over periods longer than one day." ³ reinforces this, noting RKLX is "designed for short-term tactical use. If held for more than one day, returns may deviate from the expected 2x due to factors such as volatility and compounding effects." These repeated, strong disclaimers from different credible sources emphasize the severity and consistency of this risk. These repeated and emphatic disclaimers are not added casually. They indicate a fundamental characteristic of these products that, when misused or misunderstood, often leads to investor disappointment or financial loss. This suggests a significant knowledge gap among retail investors regarding the true nature and risks of leveraged ETFs. The product design, while mathematically sound for daily targets, is fundamentally at odds with long-term holding. This highlights the broader challenge of investor education and the potential for significant harm if these complex tools are not fully understood and used as intended.

4.2 Tracking Error and Expense Ratio

Tracking Error: Although RKLX aims to achieve twice RKLB's daily percentage change, operational factors may cause minor deviations, known as tracking error. These include the cost of daily rebalancing, market impact from executing large derivative trades, and imperfect correlation or slippage between derivative (swap and option) performance and underlying RKLB stock² mentions "possible correlation errors").

Expense Ratio: RKLX charges a 1.31% total annual expense ratio². This fee is continuously deducted from the fund's assets. While the daily percentage seems small, this annual fee accumulates over time, eroding returns regardless of the underlying asset's performance or volatility impact.

These operational costs, while distinct from volatility impact, accumulate over time, further contributing to the overall "decay" or underperformance experienced by long-term holders. Beyond volatility impact as the primary issue, relevant materials also emphasize expense ratios and potential tracking errors. A 1.31% annual expense ratio means a significant portion of the fund's assets are consumed by fees over months or years. Tracking errors, even if minor daily, compound over time. While volatility impact is inherent to the leveraged strategy itself, these operational costs are additional, unavoidable performance drags. They are a constant drain, exacerbating the "decay" caused by compounding effects in volatile markets. This means investors' actual returns will be even lower than models predicting volatility impact alone would suggest.

4.3 Suitability for Tactical, Not Strategic, Investing

Given their inherent complexity, risks, and the explicit warnings from fund providers themselves, leveraged ETFs like RKLX are generally only suitable for experienced, sophisticated traders². These products are designed for very short-term tactical bets on market direction, typically held intraday or for no more than one overnight period.

Investors considering these products must have a comprehensive understanding of the underlying asset's daily volatility, the complex mechanics of compounded returns, the risks associated with derivatives, and the potential for rapid and significant capital loss. They are not designed for long-term investing or traditional buy-and-hold strategies, where their performance will almost certainly deviate negatively from expectations.

The explicit "not suitable for most investors" warning² implies a significant knowledge gap and the potential for severe harm if these products are misused or misunderstood. For example, ² explicitly states: "It is important to remember that these securities are generally designed for daily use and are typically not intended to be held overnight..."² and adds "these funds are not suitable for most investors"².³ also notes, "As a leveraged product, it is designed for short-term tactical use." These unusually strong disclaimers indicate that both issuers and regulators are aware that these products, if used beyond their intended scope, can lead to serious misunderstandings and financial losses. This points to a key challenge in investing: products that are efficient for a small subset of sophisticated traders may cause profound harm to the broader retail public, who may not fully grasp the nuances of daily rebalancing and volatility impact. This report, by clarifying these points, serves as an important educational tool to mitigate such potential harm.

Conclusion

This report's comprehensive analysis and simulations conclusively demonstrate that RKLX, as a 2x daily leveraged ETF, is highly susceptible to volatility impact. RKLB's significant price fluctuations from approximately $30 to a $53 peak and back to around $40 from June to August 2025 clearly illustrate this inherent "decay" relationship. Our simulations show that during this period, RKLX's cumulative performance significantly outperformed a simple 2x multiple of RKLB's net return. This underscores a key realization: for leveraged ETFs, the "path" of the underlying asset's price, not just its net change, is critical in determining returns.

Leveraged ETFs are complex financial instruments explicitly designed to achieve multiples of their underlying assets' "daily" performance. Holding them long-term, especially in volatile or trendless markets, will almost certainly lead to underperformance due to compounding effects and volatility impact. Additionally, operational factors like expense ratios and potential tracking errors further drag down returns over time.

Given these fundamental characteristics and inherent risks, RKLX and similar leveraged ETFs are generally unsuitable for long-term investors seeking capital appreciation or passive exposure. They are high-risk tools appropriate only for highly sophisticated traders employing very short-term tactical strategies, with deep understanding of potential decay mechanisms, and the ability to actively manage positions, often intraday. For most investors seeking RKLB exposure, direct investment in RKLB common stock or non-leveraged ETFs tracking the broader aerospace and defense industry would be more appropriate, transparent, and straightforward methods aligned with their investment objectives.