The technology segment has been outperforming this year, and among tech sector picks, robotics and artificial intelligence companies have rallied, with one particular A.I.-related ETF standing out.
The Global X Robotics & Artificial Intelligence Thematic ETF (NasdaqGM: BOTZ), which is a little over a year old, has surged 56.9% year-to-date. BOTZ also attracted heavy investment interest this year, experiencing $1.1 billion in net inflows year-to-date, according to XTF data, and now holds $1.2 billion in assets under management.
BOTZ provides exposure to companies involved in the adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial manufacturing, medicine, autonomous vehicles, and other applications.
BOTZ is a global ETF with 45.6% of its holdings being Japanese companies and another 26.8% being U.S. firms. Switzerland, Germany, U.K. and Israel combine for over 20% of the ETF’s weight. Top holdings include Nvidia 8.4%, Keyence 8.2% and Fanuc 7.8%.
The thematic sector ETF helps investors gain targeted exposure to a quickly growing segment of the tech industry.
“BOTZ offers investors access to a rapidly emerging technological theme of the application of robotics and artificial intelligence around the globe,” according to Global X. “The robotics industry is expected to grow 10% per year, eclipsing $80 billion in market size by 2020. The AI market is expected to reach $5.1 billion by 2020, from just $420 million in 2014.
Similarly, the ROBO Global Robotics & Automation Index ETF (NASDAQ: ROBO), the original ETF dedicated to robotics investing, has also enjoyed a good run, rising 40.3% and attracting $1.4 billion in net inflows year-to-date.
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ROBO, though, focuses more on U.S. companies at 40% of the portfolio, followed by Japan 30%, Germany 6%, Taiwan 6% and Switzerland 4%. Its portfolio is also more diversified with 84 component holdings, and top components including Aerovironment 2.7%, Daifuku 2.5% and Harmonic Drive Systems 2.3%.
Along with its greater U.S. focus and more diversified portfolio, ROBO has a larger tilt toward mid- and small-sized companies when compared to BOTZ. Specifically, ROBO’s market-cap weights include mega-caps 12.0%, large-caps 18.5%, mid-caps 42.8%, small-caps 16.9% and micro-caps 9.8%. In contrast, BOTZ focus on more established companies, including mega-caps 47.4%, large-caps 21.5%, mid-caps 20.4%, small-cap 8.9% and micro-caps 1.8%, which may have contributed to its outperformance in a year where smaller companies have fallen behind the large-cap segment.
For more information on the tech sector, visit our technology category.