Turbulence for a Drone-Tied ETF -- Journal Report
February 03 2019 - 9:32PM
Dow Jones News
By Gerrard Cowan
Drones have gotten some bad press lately. But they still offer
something for investors to get excited about, according to the team
behind ETFMG Drone Economy Strategy ETF (IFLY).
In December, the technology was in the headlines when suspected
drone sightings grounded flights at Gatwick Airport in the U.K.
While such incidents paint the industry in a bad light, the broader
story is more positive, says Robert Saffer, global head of ETF
sales at ETFMG. Drones are being used in areas from emergency
services to the military, and giants such as Amazon.com Inc. and
FedEx Corp. plan to use the systems for deliveries.
"We're talking about a long-term growth segment," he says.
IFLY tracks an index of global companies with exposure to the
drone industry, such as AeroVironment Inc., Boeing Co. and Parrot
SA. Because IFLY invests in companies in the broader drone
ecosystem, it also could benefit from increased interest in
counter-drone technologies, driven by incidents such as the one at
Gatwick, Mr. Saffer says.
The $39.3 million fund is up 11.4% this year through January.
However, it took a beating at the end of 2018, says ETFdb.com
analyst Kiril Nikolaev, falling more than 20% from September
through December. It has underperformed the broader market, and the
industrials and technology sectors as a whole, both during the
fourth quarter and since its March 2016 launch, he says.
Mr. Saffer says many of IFLY's investments are concentrated on
smaller companies, which were particularly hard hit by last year's
market turmoil. This performance doesn't reflect the growth
prospects of the industry, he says.
"These companies continue to invest in their technology, and
this will be reflected over time in their profitability," he
says.
Mr. Cowan is a writer in Northern Ireland. He can be reached at
reports@wsj.com.
(END) Dow Jones Newswires
February 03, 2019 22:17 ET (03:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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