Given the exponential growth rate of technology, William Studebaker, CIO and President of ROBO Global, the index provider of the ROBO Global Robotics & Automation Index ETF (NasdaqGM: ROBO), expects the cycle to quickly accelerate ahead, resulting in a shift from a corporate competitive advantage to automate or risk being left behind. The world already spends about $64 billion annually on robotics and related services, and spending is expected to surge to $1.2 trillion by 2025 as more industries improve efficiency through automation and robotics.
Investors interested in the potentially explosive growth rate of the robotics industry should keep in mind that the universe of robotics may be divided into various smaller segments. Studebaker, though, simplified the investment landscape with two distinct categories: technology and applications. Technology includes companies with products an services that enable robots to “think, sense and act,” whereas applications include companies that deploy robotic and automation technology into a product, service or manufacturing process.
ETF investors can also gain diversified exposure to the space through 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. The underlying index starts off with a global database of 1,000 companies, classifies components based on a proprietary classification system with 13 subsectors, looks for a minimum threshold for percentage of robotics and automation revenue, and selects those best positioned as market and growth leaders.
ROBO’s portfolio 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.
Financial advisors who want to learn more about the robotics and automation industry can watch the webcast here on demand.