First Trust Advisors has come out with its own artificial intelligence and robotics-related exchange traded fund to help investors gain exposure to the growth of innovative cutting-edge technology.
First Trust recently launched the First Trust Nasdaq Artificial Intelligence and Robotics ETF (NasdaqGM: ROBT), which has a 0.65% expense ratio and is also the cheapest A.I. and Robotics ETF on the market. The lower expense ratio may be a way for the fund provider to better compete against other options in the space as the company comes late into the robotics and A.I. theme.
First Trust Nasdaq Artificial Intelligence and Robotics ETF will try to reflect the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index, which is comprised of companies engaged in the artificial intelligence and robotics segments of the technology, industrial and other economic sectors, according to a prospectus sheet.
“It is clear that the growing advances in AI and Robotics, while still in early days, are increasing the rate and impact of change,” Dave Gedeon, Vice President and Head of Product Development for Nasdaq’s Global Indexes, said in a note. “The Nasdaq CTA Artificial Intelligence and Robotics Index is a new way to benchmark the performance of the companies leading the charge in this dynamic sector.”
To be included in the index, companies must classified as A.I. or robotics engagers, enablers or enhancers, as determined by the Consumer Technology Association. Specifically, enablers refers to companies that develop the building block components for robotics or A.I., such as advanced machinery, autonomous systems/self-driving vehicles, semiconductors, and databases used for machine learning. Engagers are comprised of companies that design, create, integrate, or deliver robotics and/or AI in the form of products, software, or systems. Lastly, enhancers cover a group of companies that provide their own value-added services within the AI and robotics ecosystem, but which are not core to their product or service offering.
Robotics refers to a branch of technology that deals with the design, construction, operation and applications of robots. Artificial Intelligence refers to the theory and development of computer systems that perform task normally requiring human intelligence.
Looking ahead, A.I. is expected to add up to $15.7 trillion in global GDP by 2030, according to PwC. Meanwhile, worldwide spending on robotics and related services is projected to total $97.2 billion in 2017, or a rise of 17.6% compared to 2016. Over the 2016 to 2021 forecast period, robotics spending could hit $230.7 billion in 2021 with an annual growth rate of 22.8%, according to IDC.
“Many of the technological developments taking place in AI, robotics, and automation are astounding, and we believe there are strong incentives, in both the public and the private sector, to find ways to harness these innovations,” Ryan Issakainen, Senior Vice President, ETF Strategist at First Trust, said in a note.
ROBT’s sector weights include information technology 67.7%, industrials 15.7%, consumer discretionary 8.7%, health care 7.4% and telecom services 0.6%. Top components include ServiceNow 2.53%, Hexagon AB 2.43%, Dassault Systemes S.A. 2.36%, Cloudera 2.34% and AVEVA Group Plc 2.30%.
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