As technology growth continues to pick up speed, robotics and automation could usher in the next industrial revolution. Investors can also tap into the potential explosive growth in the robotics space through a targeted exchange traded fund strategy.
“Robotics is a global mega trend that most investors are not positioned for,” William E. Studebaker, President, CIO, and Managing Partner of ROBO Global, told ETF Trends in an email.
The robotics and automation sub-sector is still in its nascent stages, which leaves a lot more room to run. For instance, there are 17,000 logistics warehouse in U.S. and less than 1% are automated, Studebaker told Nasdaq.
“We think the investment opportunity is enormous,” Studebaker told Nasdaq. “We think we are actually in the first inning of the baseball game where the players aren’t even on the field yet.”
Unlike most other products and services, robotics can have its hands in multiple sectors and areas around the world, opening up an even larger opportunity for growth
“The important thing to recognize about robotics is the foundational technology that is being applied to all markets, all geographies, all industries, and it is all happening now,” Studebaker told CNBC. “Some may buy it as a niche, but we think it is much broader than that.”
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. Specifically, the ETF includes a 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.
The robotics ETF’s portfolio may also 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.
“If you’re looking at the underlying characteristics of the portfolio, these companies have materially higher earnings growth,” Studebaker said.
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