As technology advances, a rising industry of robotics and automation is quickly changing the way we work and live. Investors can also gain exposure to this growing technology industry through a targeted exchange traded fund strategy.
On the recent webcast (available on-demand for CE Credit), Plug into Robotics with an ETF Strategy, Travis Briggs, CEO and Partner at ROBO Global US, argued that the robotics and automation industry is positioned to outperform the global market as the products and services become increasingly visible in every aspect of our daily and business lives.
“Robotics is not a niche, but a foundational technology being applied to all industries and markets,” Briggs said.
William Studebaker, Head of Global Strategies and Director of Research at ROBO Global, outlined the growth of the robotics industry from the humble beginnings of industrial robots first introduced exclusively for auto manufacturers to the current greater adoption through decreasing automation costs and technology advancements that have greatly expanded applications and improved productivity.
Henrick Christensen, Director of UC San Diego Contextual Robotics Institute, pointed out that according to Myria research, the robotics market could expand to $1.2 trillion by 2025, compared to the current size of about $64 billion, which leaves a lot of room for further growth. The robotics market could help shape both industrial and consumer industries through applications like manufacturing 3D printing, healthcare, consumer homes, entertainment, logistics, telepresence, energy and drones, among others.
A number of factors are fueling the global growth in the rising robotics segment. For example, there is a convergence of falling prices and performance improvements of robotics, increased demand for high complexity and mission critical applications, increasing global automation penetration rates, high labor costs and a greater need for productivity, and mass production that is increasingly being customized.
The industrial sector has been a key industry in the demand for robotics. Christensen projected that the worldwide annual supply of industrial robots has risen 15% per year on average from 2009 through 2018, with Asian countries like Japan, China and South Korea increasingly raising demand for automation and robots.
Investors can witness that many robotics companies have integrated with many various industries, and the adoption could continue to grow. For instance, Briggs pointed to robotics in industrial manufacturing for factory assembly, logistics in materials handling, drones military and rescue operations and surgical tools for healthcare, among others.
To tap into this rising integration and demand of robotics in various industries, investors can take a look at the ROBO Global Robotics & Automation Index ETF (NasdaqGM: ROBO), which provides exposure to global companies engaged in the business of robotics-related or automation-related industries. Robotics- or automation-related products and services include any technology, service or device that supports, aids or contributes to any type of robot, robotic action or automation system process, software or management.
ROBO follows a “two-tiered, equal-weighted system that ensures the strategy provides diversified exposure to a broad global ecosystem of new and enabling technologies as well as established automation/robotic providers,” Briggs said, explaining the 60% tilt toward non-bellwether robotics with growing revenue contributions and a 40% tilt toward bellwether robotics companies that are well-established in the space.
Studebaker also argued that ROBO’s portfolio may provide exposure to companies with sustainable growth opportunities, as the underlying ROBO Global Robotics & Automation Index has exhibited attractive sales growth, EBITDA growth and earnings-per-share growth. The underlying index has even outperformed the broader technology and S&P 500 index since the 2008 financial downturn.
Financial advisors who are interested in learning more about the robotics industry can watch the webcast here on demand.