ETF Trends
ETF Trends

As various industries and sectors try to grow more efficient to maximize profits and minimize costs, more companies are turning to robotics and automation, and investors can tap into this potential area of growth through a targeted exchange traded fund.

ETF Trends publisher Tom Lydon spoke with William Studebaker, President & CIO of ROBO Global, at the Inside ETFs conference that ran Jan. 22-25, 2017 to talk about the transformational investment opportunity in robotics and automation.

“ROBO Global is a financial services firm,” Studebaker said. “They were actually the first to focus on robotics and automation, so we sort of had the intuitive insight – three, four years ago – to identify robotics automation as a truly transformational area to invest, and at the time, there really was not an opportunity for investors to invest.”

Consequently, ROBO Global created an index, which has served as the underlying benchmark for 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.

“We’ve really identified some of the premier thought leaders in robotics and automation as well as entrepreneurs and financial people,” Studebaker said.

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

“If you look at robotics, what’s important to consider here is that it’s not a niche,” Studebaker said. “We like to identify it as being a foundational technology that’s being applied across all industries, all geographies and it’s happening now.”

To tap into this rising integration and demand of robotics in various industries, investors can take a look at ROBO. The robotics ETF 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.