When some exchange traded funds come to market, they are labeled as “niche” products. That may have been the case when the ROBO Global Robotics & Automation Index ETF (NasdaqGM: ROBO) debuted, but niche or not, ROBO is rewarding investors.
ROBO, which provides exposure to global companies engaged in the business of robotics-related or automation-related industries, is up 39.1% over the past year. 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.
The once-far flung concept of robotics is gaining some momentum. For example, the International Federation of Robotics expects that worldwide sales of robots will rise by 6 percent between 2014 and 2016, and over 190,000 industrial robots will be supplied to companies around the globe in 2016, said Robo-Stox in the statement. ROBO debuted in late 2013.
“Robotics is a key transformative technology that can revolutionize manufacturing. American workers no longer aspire to low-level factory jobs, and the cost of U.S. workers has been slowly rising due to insurance and healthcare costs,” according to ETF Daily News. “Even when workers are affordable, they are still human. That means they have limitations when it comes to adaptability, precision and reliability.”
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.
“Chances are, most investors aren’t positioned for the rising integration and demand for robotics in various industries. For example, the ROBO Global U.S. Index has just 1.78% overlap with the S&P 500 Index and only 1.80% overlap with the MSCI World Index,” notes ETF Daily News.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.