Thematic exchange-traded fund provider PureFunds has launched the PureFunds Drone Economy Strategy ETF (NYSE Arca: IFLY), the world’s first pure-play ETF to provide exposure to companies designing, manufacturing and researching drones and drone technology.
As of 9 March 2016, the top three holdings in the PureFunds Drone Economy Strategy ETF are Aerovironment (12.4%), Parrot (9.1%) and Boeing (4.6%).
The fund will track the performance of the Reality Shares Drone Index, which currently comprises 47 companies 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.
“Like other established investment sectors, technology has been driven by the growth of its various industries,” said Andrew Chanin, CEO of PureFunds. “Investors of all backgrounds have sought the opportunity to diversify their broad technology exposure with a thematic approach, and the PureFunds Drone Economy Strategy ETF offers added flexibility for investing in technology.”
Kian Salehizadeh, analyst at Reality Shares, added: “Drones have already demonstrated how they can reshape the work of some corporations and government entities. Insurers are using them to evaluate claims and property damage, agriculturalists can better address crop and land damages, and police departments have deployed drones to address criminal activity before it begins. New discoveries of drone use will continue as more organizations embrace the latest advances in technology.”
While the discussion of drone application has historically been dominated by military operations and more lately for personal recreation, there is a growing commercial demand for unmanned aerial devices across virtually all industries. This demand suggests strong business fundamentals for drone technology firms through a highly diversified source of revenue.
As noted on PureFunds website, some industries currently interested in applying drone technology include agriculture – for the real-time analysis of soils, crops, nutrients and moisture levels; utilities – for inspecting, surveying and monitoring the management of pipelines and power stations; construction – for the inspection and surveillance of hard-to-reach areas which would improve the safety of personnel; and e-commerce – for its potential to drastically improve the ‘last mile’ of the supply chain.
As of 9 March 2016, the fund has country exposure concentrated primarily in the United States (55.1%), although France (16.9%), Japan (9.3%) and the United Kingdom (6.4%) also play significant roles. Sub industry exposure is concentrated in the defence sector (64.2%) with remaining exposures in the commercial (20.9%) and recreational (14.9%) sectors. The fund has a total expense ratio of 0.75%.
The top three holdings in the fund are Aerovironment (12.4%), Parrot (9.1%) and Boeing (4.6%). Aerovironment, a California-headquartered company, derives roughly 90% of its revenue from its drone segment while it also has significant operations in developing energy efficient battery packs. Parrot is a French company specialising in a range of voice recognition and signal processing technologies. Although the firm has significant operations in the drone market, it provides a range of other services from Bluetooth hands-free car kits to personal digital assistants designed for visually impaired people. Boeing is a US company that designs, manufactures and sells airplanes, rotorcraft, rockets and satellites. It is the second largest defence contractor in the world and the largest exporter in the US by dollar value.
The PureFunds Drone Economy Strategy ETF is the fourth addition to PureFunds’ suite of SelecTech ETFs which provide exposure to thematic segments of the global technology sector. The full range of SelecTech ETFs include:
PureFunds Drone Economy Strategy ETF (IFLY)
PureFunds Cyber Security ETF (HACK)
PureFunds Big Data ETF (BDAT)
PureFunds Mobile Payments ETF (IPAY)
The ETF has been launched in collaboration with Factor Advisors, ISE ETF Ventures, Reality Shares, and DRONELIFE.