Top three drone stocks lift REX Drone ETF amid defense spending

The REX Drone ETF (DRNZ) has returned 15.10% year to date, driven in part by strong gains in three holdings: NextVision Stabilized Systems, Red Cat Holdings and Unusual Machines. Higher defense budgets and growing military use of uncrewed aerial vehicles are cited as factors behind demand for drone systems and components.

DRNZ tracks the VettaFi Drone Index and held about $86.65 million in assets under management with a 0.65% expense ratio. The fund’s portfolio includes companies that make sensors and gimbals, tactical drones and internal components, offering exposure across the drone supply chain.

NextVision is the ETF’s largest holding at roughly 12.89% of the portfolio and has gained 45.66% year to date. The company manufactures lightweight electro-optical and infrared gimbals used on surveillance and reconnaissance drones. NextVision raised its revenue guidance, expanded production capacity and reported a backlog of orders in recent company filings and releases, which the company identified as supporting near-term sales.

Red Cat, a tactical drone maker focused on defense and national security, represents about 4.05% of DRNZ and has risen 23.20% YTD. The company secured a contract with Japan’s Ministry of Defense to supply tactical intelligence drones and acquired Quaze Technologies, a wireless charging developer, to add charging and endurance capabilities to its platforms.

Unusual Machines accounts for roughly 4.74% of the ETF and has climbed 35.64% YTD. The firm supplies internal drone technologies and components. It reported improved first-quarter 2026 financial results and entered a merger agreement to acquire Upgrade Energy, an agreement the company describes as a step to develop domestic battery manufacturing capacity for drones.

Several of DRNZ’s top holdings posted gains as defense budgets rose and military drone use expanded. The fund’s mix of payload developers, platform manufacturers and component suppliers offers diversified exposure across different parts of the UAV value chain rather than concentrating on a single airframe maker.

VettaFi LLC is the index provider for the VettaFi Drone Index and receives an index-licensing fee. VettaFi does not issue, sponsor, endorse or sell DRNZ and has no obligation related to the fund’s issuance, administration, marketing or trading. Governments implementing defense modernization programs and pursuing new drone capabilities have kept investor attention on the sector.