Defiance Drone and Modern Warfare ETF (JEDI) Slips -21% Over 30 Days Amid Sector Rotation

Key Takeaways

• JEDI declined roughly 21% over the trailing 30 days, sharply underperforming the broader U.S. equity market.
• The fund is down approximately 12% over the trailing three months, masking a mid-summer rally that fully reversed.
• The selloff reflects a broad risk-off rotation out of high-beta, small-cap defense-technology and space names rather than a single company-specific event.
• Analyst commentary indicates the defense-technology complex fell about 25% from its mid-August peak as sentiment shifted from budget optimism toward austerity concerns.
• Heaviest-weighted positions such as Unusual Machines, Redwire, and Ondas Holdings amplified downside because of their small-cap, early-stage profiles.
• With exposure concentrated in Industrials and Information Technology, the fund remains highly sensitive to interest-rate expectations and investor risk appetite.
• For additional context on this ticker, explore the Price Targets and Forecast pages.
• Explore Trending AI Robots for data-driven trading ideas across the market.

Defiance Drone and Modern Warfare ETF (JEDI) Overview and Portfolio Exposure

The Defiance Drone and Modern Warfare ETF is a passively managed exchange-traded fund that seeks to track the BITA Drone & Modern Warfare Select Index. The index targets companies publicly traded in developed markets that generate meaningful revenue from the drone and modern-warfare industry, including unmanned systems, military robotics, space and satellite technology, defense communications, and cybersecurity.

The fund is non-diversified and holds roughly 45 securities, with assets under management of approximately $200 million and an expense ratio of 0.69%. Portfolio exposure is concentrated in Industrials and Information Technology, which together account for the vast majority of holdings, with a smaller allocation to Communication Services. Top positions have included Unusual Machines (UMAC), Redwire (RDW), Ondas Holdings (ONDS), C3.ai (AI), Archer Aviation (ACHR), Intuitive Machines (LUNR), Red Cat Holdings (RCAT), and Rocket Lab (RKLB).

This structure helps explain the fund's recent behavior: a high-conviction basket of small- and mid-cap, often pre-profit growth companies carries elevated volatility. When risk appetite weakens, these names tend to fall faster than the broader market. I also checked this using Tickeron’s AI Screener to see how the holdings compare to peers in the sector.

Defiance Drone and Modern Warfare ETF (JEDI) Price Performance: Last 30 Days vs. Quarter

Over the trailing 30 days, JEDI fell roughly 21%, declining from about $26.50 per share to approximately $21. The move was not a single-day shock but a steady, downward-trending slide punctuated by intermittent bounces, characteristic of a broad de-risking across the sector.

The trailing three-month picture is more complex. The fund began the period near $24, rallied to a peak above $31 in mid-August, and then retraced the entire advance before falling further. Net of that volatility, the fund is down about 12% over the quarter. In other words, the recent 30-day decline is the continuation of a correction that began once the summer's defense-technology enthusiasm faded.

What Drove JEDI Price in the Last 30 Days

The primary driver was a sector-wide risk-off move rather than idiosyncratic weakness in any single holding. Equity strategists have described the period as a tech-led selloff tied to concerns over AI-related debt, firm inflation readings, and renewed rate-hike fears, all of which hit high-beta small caps hardest.

Within the portfolio, the heaviest concentrations bore the brunt. Unusual Machines, a top holding with double-digit weighting, pulled back sharply despite a strong year-to-date run, while Redwire and Ondas Holdings also declined amid broader space and drone-sector contagion. Analysts noted that the defense-technology narrative shifted from budgetary exuberance toward expectations of tighter spending, with one firm reporting its defense-tech index down roughly 25% from mid-August. AeroVironment (AVAV), a component of the drone complex, has fallen roughly 42% year to date after a U.S. government contract cancellation, underscoring how individual award setbacks can ripple across the group.

What Drove JEDI Performance Over the Last Quarter

The broader three-month trend reflects a full unwind of mid-summer optimism. The fund's July-to-August rally was fueled by enthusiasm for autonomous systems, counter-drone technology, and rising global defense budgets. That momentum stalled as investors began questioning whether order backlogs would convert into near-term revenue and whether elevated valuations were justified.

Longer-term pressures included persistent share dilution among early-stage companies funding losses through equity issuance, execution risk around back-half-weighted revenue targets, and a more cautious tone on fiscal outlooks. With its largest holdings still relatively small and volatile, JEDI's quarterly decline of about 12% illustrates how quickly thematic defense exposure can give back gains when sentiment turns.

JEDI ETF Outlook: What Investors Should Watch Next

Several themes are likely to influence JEDI over the coming months. The most important is the direction of interest-rate expectations and inflation data, which directly affect the small-cap, high-beta growth names that dominate the portfolio. A sustained risk-on environment would likely support these holdings, while further rate-hike concerns could prolong volatility.

Investors should also monitor defense-budget developments and government contracting activity, since sentiment has shifted toward concerns about fiscal austerity. Earnings execution across key holdings will matter: companies such as Red Cat and Ondas Holdings carry large back-half revenue targets, and their ability to convert order backlogs into reported revenue remains a central test. Share-dilution dynamics among pre-profit firms and any further contract cancellations are additional risks. Finally, watch fund flows and sector rotation, as capital returning to defense technology could stabilize the fund, while continued outflows would likely keep pressure on the group.

Using Tickeron’s AI Screener in My Research Process

Tickeron's AI Screener is an AI-powered stock and ETF discovery platform that helps investors scan thousands of securities using technical indicators, fundamentals, volatility metrics, price patterns, industry filters, AI-generated signals, and performance characteristics. The tool is designed to surface trending securities, breakout candidates, and emerging opportunities more efficiently than manual screening, allowing users to filter by sector, theme, and risk profile. For investors tracking the defense-technology and drone complex, the AI Screener provides a systematic way to monitor the same high-beta names that drive JEDI's performance. I find it useful for building a more disciplined, data-driven watchlist when analyzing thematic funds like this one.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

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Contributor

Scott Bell|Expert

I’m a trader and independent researcher. My interest lies at the intersection of financial markets, algorithms, and capital management. I develop data-driven tools and strategies and study algorithmic approaches to market analysis. I help turn complex market data into clear insights and practical systems. I believe technology should support, not replace, investment thinking

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