Amid an array of technological advancements, robotics investing is gaining a broader audience, and exchange traded funds issuers are meeting that demand.
However, the various robotics ETFs on the market today aren’t carbon copies of each other, and one that really breaks from the pack is the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ). An obvious way ARKG separates itself from competitors is that it’s actively managed in a field predominantly filled with passive funds.
By not being shackled by index constraints, ARKQ can take advantage of company-specific and geographic opportunities. A prime example of ARKQ doing just that is Komatsu, a Japanese manufacturer of construction and mining equipment.
That sounds like a prosaic business model, and to some extent it is. However, as is being seen here in the U.S. with agriculture equipment maker Deere (NYSE:DE), another ARKQ component, old guard machinery makers have more inroads to the robotics space than many investors realize.
Proving that it has disruptive growth chops, Komatsu isn’t just a top 10 holding in ARKQ. It, along with Deere, is also a member of the ARK Space Exploration and Innovation ETF (ARKX). The Japanese company is worthy of its place in the ARK ETFs.
As Leo Lewis reports for the Financial Times, Komatsu isn’t a robotics maker in the most traditional sense, but it is at the forefront of providing technology and related foundational pieces for machines that need “communications, data-gathering and data-processing tools that make their operations more efficient now and could ultimately lead to many of them becoming human-free.”
Komatsu’s place in ARKQ and ARKX is relevant for another reason: highlighting both funds’ geographic flexibility. In the case of ARKQ, the fund devotes 20.5% of its weight to Asia-Pacific companies, and that doesn’t mean a big weight to China.
As ARK founder Cathie Wood recently noted, Japan is a hotbed of advancements in the artificial intelligence, energy storage, and robotics industries. With that in mind, it wouldn’t be surprising to see ARKQ’s Japan exposure increase with time.
As the Financial Times reports, the measuring stick these days for robotics companies is capabilities, and Japanese firms are, by that metric, advancing at a prodigious pace, confirming that it’s to investors’ benefit that ARK funds feature exposure to Komatsu.
For more news, information, and strategy, visit the Disruptive Technology Channel.
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.