The PureFunds Drone Economy Strategy ETF (NYSEARCA: IFLY) can be viewed as a niche exchange traded fund, but that is not a negative nor is that label stopping the drone ETF from delivering impressive performance for investors.
IFLY, which debuted in March 2016, is up more than 20% year-to-date and nearly 25% over the past 12 months. The ETF is the first ETF providing access to companies designing, manufacturing, and researching drones and drone technology.
IFLY tracks the the Reality Shares Drone Index (RSD), a basket of companies determined based on a combination of Projected revenue from drone technology; Direct involvement in developing or researching drone technology; Services provided to companies directly involved in drone technology; and the expected growth of a company’s revenue from drone technology.
“Not unlike the introduction of the automobile over one hundred years ago, the introduction of the commercial drone industry will bring many changes in the way that businesses and government agencies operate. The growth of the drone market will likely be determined by a combination of technological and regulatory issues. Regardless, the benefits of drone technology are expected to touch a majority of industries in the coming years,” according to PureFunds.
There are myriad uses for drone technology, a factor that could be a boon for IFLY over the long-term.
“As drone technology enters a cycle of ballooning growth, it is finding applications across many industries such as agriculture, construction, and utilities for purposes that were nearly unimaginable 10 years ago,” according to Equities.com. “In the construction industry, for example, the current value of labor and services provided by drones is estimated to be $127.3 billion.”
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IFLY currently holds 44 stocks and the ETF’s top 10 holdings combine for nearly half the fund’s weight weight. Familiar names among those top 10 holdings include Dow component Boeing Co. (NYSE: BA), GoPro Inc. (NASDAQ: GPRO) and Honeywell Inc. (NYSE: HON). Just over half of IFLY’s holdings are U.S. companies while most of the remainders are Asian and European firms.
“As a new and attractive industry, drones also have some weaknesses, including a lack of thorough regulation and big players to push the industry forward,” reports Equities.com. “It will become easier to predict the industry’s movements once these weaknesses are addressed, at least to some extent.”
IFLY has $19.4 million in assets under management and charges 0.75% per year, or $75 on a $10,000 investment.