Investing in Robotics? Follow These 5 Rules

Pursue investment strategies that are based on the guidance of industry experts, academics, and entrepreneurs that offer the knowledge and insight to foresee emerging trends, identify the most promising new technologies, and understand the intricate interaction between technologies and their specific applications.

This type of research-driven approach is much more likely to successfully identify players with the strongest prospect for growth and revenue generation and that span the entire universe of robotics, automation, and AI.

4. Look for pure robotics exposure.

Don’t assume that because an index or fund includes the word “robo” that it is delivering the pure exposure to robotics you are seeking. In an attempt to take advantage of the push toward robotics investments, many marketers are choosing to lead with the “robo” branding, but the holdings don’t necessarily reflect the name.

To help maximize your exposure to tomorrow’s winners, look for strategies whose holdings include companies that are linked directly to robotics, automation, and AI. The most focused strategies are designed to target companies within each sub-sector of the comprehensive RAAI ecosystem, and to track emerging trends within the space.

5. Keep costs to a minimum.

The robotics landscape is changing at lightning speed. That means that even a passive index will need to be adjusted and rebalanced regularly to continue to capture growth opportunities. In a purely active strategy, such shifts can dramatically increase the volume of transactions to maintain an optimal level of exposure to the right companies at the right time.

Rather than taking the financial hit for each trade, consider leveraging a carefully selected portfolio. Doing so allows any necessary rebalancing and reallocation to occur within the wrapping of the fund, which significantly reduces costs to the individual investor.

That said, it’s important not to look at cost alone. Make sure you’re getting the value you want by choosing a fund that provides targeted exposure to robotics, automation, and AI and offers a stable performance track record.

As more and more robotics strategies come to market, taking the time to investigate how each solution is designed and structured is critical, but it’s a simple task—as long as you know what to look for.

This article has been republished with permission from ROBO Global.