3 Defense ETFs with Exposure to the Global Surge in Military Drones

Drones are becoming a primary method for warfare. Indeed, following U.S.–Israeli strikes on Iranian nuclear and military sites on February 28, Iran has retaliated by launching nearly 4,000 drones across at least a dozen countries. Many of these low-cost Shahed drones have targeted critical infrastructure and have pushed oil prices above $100 per barrel. In response, the U.S. has begun deploying LUCAS “kamikaze” drones modeled after Iranian designs. For investors who want to hedge against a prolonged war, the following defense ETFs focus heavily on drone and autonomous warfare systems.

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**1. Defiance Drone & Modern Warfare ETF JEDI -2.10% ▼ **

To begin with, the Defiance Drone & Modern Warfare ETF focuses on companies that are involved in military drones, autonomous systems, AI-powered defense technologies, and robotics used in modern warfare. Because of this narrow focus, it provides one of the most direct ways for investors to gain exposure to the growing drone warfare industry.

**2. REX Drone ETF DRNZ -0.82% ▼ **

Next, we have the REX Drone ETF, which invests in companies that earn a significant share of their revenue from unmanned aerial vehicles and related technologies. As governments and defense organizations continue to increase spending on drones and counter-drone systems, many of the companies in this ETF could benefit from rising demand.

**3. ARK Autonomous Technology & Robotics ETF ARKQ -2.38% ▼ **

Lastly, we have the ARK Autonomous Technology & Robotics ETF. Although ARKQ is not strictly a drone-focused ETF, it invests heavily in autonomous technology, robotics, and aerospace innovation. This includes several drone-related companies such as AeroVironment AVAV -2.99% ▼ and other unmanned systems developers. As a result, the ETF offers a more diversified way to gain exposure to the wider drone and automation ecosystem.

Which Defense ETF Is the Better Buy?

Turning to Wall Street, out of the three ETFs mentioned above, analysts think that ARKQ has the most room to run. In fact, ARKQ’s price target of $151.75 per share implies 27.6% upside potential.

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