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If Donald Trump makes good on his tough-guy rhetoric, his administration will implement an aggressive and interventionist foreign policy in regions around the world. The president-elect is ready to cry havoc, and let slip the dogs of war.

Trump's roster of defense advisers and potential Pentagon officials is a "who's who" of neoconservatives and right-wing hawks, from John Bolton to Newt Gingrich. During the contentious campaign, Trump repeatedly asserted the U.S. needs to "get tough" with not only terrorists and nation-state rivals, but also with American allies such as NATO. The almost certain result: a massive multiyear boost to the already large U.S. defense budget.

Below, we pinpoint the single best trade to make amid this bellicose reality. The ugliness of war can't be wished away; savvy investors are dispassionate and deal with the world as they find it. If you're looking for a highly lucrative investment trend with long-term momentum, the unstoppable rise in defense spending fits the bill.

Several blue-chip aerospace/defense stocks are smart investment bets on the coming era of militarism under Trump. They include Boeing, Lockheed Martin, Northrup Grumman, Raytheon and General Electric. All of these stocks are poised to gain in 2017 and beyond, as their coffers are filled with military largess from Uncle Sam. Problem is, the extent of their capital appreciation is limited by their sheer size.

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What's more, each individual company is vulnerable to the ups and downs of the Pentagon's Byzantine budgeting cycle. A delayed or deferred contract can clobber a defense contractor's stock for an extended period, even if the punishment from investors is unwarranted.

If you're risk-averse but still hungry for growth, an easy and simple move is to buy one investment: the SPDR S&P Aerospace & DefenseETF (XAR) - Get SPDR S&P Aerospace & Defense ETF Report , the benchmark for the sector.

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Other exchange-traded funds serve as plays on aerospace/defense, but SPDR S&P Aerospace & Defense ETF is among the biggest and most diversified. It's also been the best performing among the top three in 2016, with a year-to-date return of 18%, compared with 17% for the iShares U.S. Aerospace & Defense ETF (ITA) - Get iShares U.S. Aerospace & Defense ETF Report and 16% for the PowerShares Aerospace & Defense Portfolio ETF (PPA) - Get Invesco Aerospace & Defense ETF Report . All three have handily beaten the S&P 500, which has returned 5.6% year to date.

With total net assets of $299.3 million, The iShares U.S. Aerospace & Defense ETF's holdings include the mega-cap behemoths but also mid-cap players, in industries that encompass aircraft fuselage manufacture, electronics, sensors, avionics, missiles and spare parts.

Top holdings include B/E Aerospace, Boeing, Spirit AeroSystems Holdings, Northrop Grumman, Rockwell Collins, Lockheed Martin, Textron, Raytheon, General Dynamics and United Technologies. The fund's expense ratio is 0.35%, reasonable for its class.

America's growing defense needs, combined with the Trumpian "fear factor," should boost this ETF well into the Republican administration's first term and probably beyond.


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John Persinos is an investment analyst at Investing Daily. Persinos specializes in the aerospace/defense sector and serves as an analyst with the aerospace consultancy Teal Group. At the time of publication, he owned shares of Boeing, General Electric and Raytheon.