3 Stocks Drive Strong Performance Inside DRNZ

The thematic expansion of defense technology and automated hardware continues to drive investor interest toward the REX Drone ETF (DRNZ). Launched to track the VettaFi Drone Index, the fund offers pure-play exposure to the expanding global uncrewed aerial vehicle (UAV) ecosystem. DRNZ has returned 15.10% year-to-date. The fund has an expense ratio of 0.65% and approximately $86.65 million in assets under management. 

Key Takeaways

• The REX Drone ETF (DRNZ) captures thematic growth across the uncrewed aerial vehicle ecosystem by holding a mix of payload developers, drone manufacturers, and component suppliers.
• NextVision, Red Cat Holdings, and Unusual Machines are benefiting from rising global defense spending and increased military drone adoption.
• The three companies operate across different parts of the drone industry, highlighting DRNZ’s diversified exposure strategy.

Demand for Drone Imaging Systems Rises

Within its portfolio, three holdings — NextVision Stabilized Systems (NXSN), Red Cat Holdings Inc. (RCAT), and Unusual Machines Inc. (UMAC) — have emerged as key drivers of performance. While these companies share a common tailwind from rising defense spending, their different roles across the drone industry reflect the fund’s diversified approach to the sector.

NextVision continues to drive much of DRNZ’s performance, gaining 45.66% YTD, according to YCharts. The company, which is the ETF’s top holding with a 12.89% portfolio weight, has benefited from higher revenue guidance and expanded production capacity.

The company develops lightweight electro-optical and infrared (EO/IR) gimbals used in surveillance and reconnaissance drones. According to a press release, the company continues to benefit from order backlog, suggesting sustained demand for its products.

Red Cat Expands Military Drone Business Internationally

In contrast, Red Cat Holdings operates as a tactical drone manufacturer focused on defense and national security applications. Red Cat remains a top-10 holding in DRNZ, with a portfolio weight of 4.05%. As of May 27, 2026, the stock has gained 23.20% YTD.

Red Cat recently expanded its international presence after securing a contract with Japan’s Ministry of Defense to provide tactical intelligence drones. Additionally, its acquisition of wireless charging company Quaze Technologies strengthens its capabilities in extended autonomous drone capabilities.

Unusual Machines Strengthens Position in Drone Components Market

Further down the supply chain, Unusual Machines operates as a supplier of internal drone technologies and components. The stock has gained 35.64% YTD, while the company represents 4.74% of the DRNZ portfolio.

The company reported a major improvement in financial performance during the first quarter of 2026, and its merger agreement to acquire Upgrade Energy signals a strategic move toward domestic battery manufacturing capabilities.

Defense Spending Continues to Support Drone Stocks

Several of the top holdings inside DRNZ have posted strong gains as global defense spending and military drone adoption continue to increase. For advisors and thematic investors, the differences between these companies highlight the ETF’s diversified approach. Rather than focusing on a single drone manufacturer, DRNZ provides exposure to growth opportunities across the broader drone ecosystem. 

As governments continue expanding defense modernization programs, investors will likely keep watching the drone sector for additional growth opportunities.

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VettaFi LLC (“VettaFi”) is the index provider for DRNZ which it receives an index licensing fee. However, DRNZ 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 DRNZ.

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