To help manage this risk, ROBO Global invests across the entire global value chain of RAAI, carefully selecting industry leaders with all levels of market capitalization, across all major geographic regions. Historically, bigger isn’t always better, especially in a quickly evolving market. During a downturn, either within a sector or across the market as a whole, companies with the largest market cap and expensive valuations often suffer the greatest losses, putting funds that invest primarily or solely in these stocks at considerable risk.
To protect against this risk, 75% of the ROBO Global Robotics & Automation Index is invested in mid-cap and small-cap names. Also, in stark contrast to other robotics-focused strategies, the ROBO Global Robotics & Automation Index is modified equal-weighted—not capitalization-weighted. This weighting provides investors with equally diversified equity exposure, including more exposure to the small-cap and mid-cap companies that may have a higher growth potential—and less exposure to risk.
Adding RAAI to the mix is a great way to help protect your portfolio against the risk of a downturn. Gaining broad exposure to the sector using a research-based approach that is specifically designed to capture consistent growth potential over time may be just the thing to (finally) help you get a good night’s sleep—even when the market is anything but smooth sailing.
For more trends in robotics and artificial intelligence, visit the Robotics & AI Channel.