As Domestic Drone Industry Ramps Up, This ETF Can Take Flight

The war in Ukraine stands as confirmation that drone technology is a key element in the future of warfare. In the meantime, drones are increasingly prominent parts of global national security budgets. That trend could portend long-term upside for drone-exposed ETFs such as the WisdomTree Physical AI, Humanoids, and Drones Fund (WDRN) .

WDRN, which came to market in May, isn’t a dedicated drone fund. However, it has ample exposure to that burgeoning industry — an important trait at a time when the U.S. needs to play catch-up with China’s drone industry.

As Christopher Gannatti , global head of research at WisdomTree points out, China’s current grip on the global drone industry is unmatched. However, that grip doesn’t have guaranteed permanence. Other countries, namely the U.S., are displaying willingness to invest in domestic drone industries, potentially supporting the long-term case for ETFs such as WDRN.

“A combination of geopolitical pressure, regulatory action, targeted government financing, and private investment is beginning to construct a domestic U.S. drone supply chain. It is still early. The gaps are real,” notes Gannatti.

In terms of industry age, the drone segment is young. Still, U.S. investors have a fair amount of viable publicly traded options consider. On that note, WDRN is potentially advantageous, because it removes the stock-picking burden. Another perk offered by the new WisdomTree ETF is that it provides exposure to multiple drone segments, including original equipment manufacturers (OEMs), purveyors of counter drone technology, producers of drone-specific components and semiconductors, software and diverse aerospace firms that have drone businesses.

Indeed, WDRN’s drone holdings aren’t just diverse. Some stand to benefit as the U.S. reduces its dependence on...