Disruptive forces are among us irrespective of which sector one chooses to focus on, and the impact of technology, such as robotics, is just barely scratching the surface. This gives ETF investors the opportunity to jump in on disruptive-focused funds that delve into technology that is transformative.
According to Shahin Farshchi of Lux Capital who opined on the industry in a Tech Crunch article, the area of robotics has yet to heat up in terms of oversaturation.
Trends in robotics that elicit excitement:
“The opportunity to unlock human superpowers:
- Increase productivity to enhance creativity leading to new products and businesses.
- Automating dangerous tasks and eliminating undesirable, dangerous jobs in mining, manufacturing, and shipping/logistics.
- Making the most deadly mode of transport: driving, 100% safe.”
Time spent on robotics and whether the industry is underheated:
- “Three-quarters of the new opportunities I look at involve some sort of automation.
- The market for robot startups attempting direct human labor replacement, floor-sweeping, and dumb-waiter robots, and robotic lawnmowers and vacuums is OVER heated (too many startups).
- The market for robot startups that assist human workers, increase human productivity, and automate undesirable human tasks is UNDER heated (not enough startups).”
To take advantage of this transformative movement, investors can look at the ARK Innovation Fund (NYSEArca: ARKK). ARKK’s focus is primarily on domestic and foreign equity securities of companies that coincide with the ETF’s investment theme of disruptive innovation–a technology or strategy that disrupts the status quo and develops its own niche market.
ARKK invests in both developed and emerging markets with the intent to use American Depositary Receipts (ADRs)–securities offered in the U.S., but are offered as a specified number of shares in a foreign corporation.
Fund facts:
- Exposure to Innovation: Aims for thematic multi-cap exposure to innovation across sectors.ARK believes the securities held in ARKK present the best risk-reward opportunities from ARK’sinnovation-based themes.
- Growth Potential: Aims to capture long-term alpha+ with low correlation of relative returns totraditional growth strategies and negative correlation to value strategies.
- Diversification: Offers a tool for diversification due to little overlap with traditional indices.It can be a complement to traditional value/growth strategies.
- Research: Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.
- Cost Effectiveness: Provides a lower cost alternative to mutual funds with true active management in an Exchange Traded Fund (ETF) that invests in rapidly moving themes.
For more market trends, visit ETF Trends.
