All-Robot Assault in Ukraine Boosts Drone Investing Case

The history of warfare includes some major milestones that changed how war was fought. A recent announcement by Ukraine may represent just the latest in that long, bloody list. According to the country’s president, Volodymyr Zelensky, Ukrainian forces captured a Russian position without any human forces. Instead, a combination of ground and air robots did the work. This marks a huge step forward in robotic warfare and a big boost for the case for investing in drones.

Key Takeaways

• Drone warfare has taken on a new form in Ukraine, with robots now winning fights without any direct human support.
• That further highlights the investment case for defense and robotics, with drones as the key.
• The ETF wrapper offers solutions, such as DRNZ.

While the truth of the country’s claim has not yet been independently verified, it should not be surprising to close observers of the Russian invasion of Ukraine. Amid the tragedy, both militaries have used the conflict as a testing ground for a new type of warfare in which drones dominate the field. Now, with robots involved in ground combat so much as to not require humans in some cases, it seems that the future is now.

Investors who have been interested in drones have options, but for a specific drone ETF, DRNZ may be the key fund to watch. DRNZ, the REX Drone ETF, offers a targeted focus on the drone industry. Charging just 1 basis point (bps) per ETF Database data, the fund tracks the VettaFi Drone Index. 

See more: Analysis: Active ETFs Lapped Passive ETF Inflows in March

That index includes global equities involved in drone manufacturing and development. Those firms must have at least 50% of their assets and derive at least 50% of their revenues from drones, UAV manufacturing, or tech development. The index allocates 80% of assets to pure-play drone names and 20% to more diversified names. It caps pureplay firms at a 15% weight.

This amount has helped the drone-investing ETF return 16.1% YTD, according to ETF Database data. That has notably outperformed the S&P 500 over the same period. That has outperformed rival defense ETFs like the ARK Space & Defense Innovation ETF (ARKX) and the Global X Defense Tech ETF (SHLD) YTD. 

With robotics advancing and changing the fundamental nature of warfare, and geopolitical tensions rising, a drone-investing ETF could be intriguing. For those looking for just such a fund, DRNZ may be worth watching. 

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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.