On the recent (available on demand for CE Credit), Future Proof Your Clients’ Portfolios with Robotics & AI, William Studebaker, CIO and President of ROBO Global, argued that the robotics and artificial intelligence industry is set on an exponential growth path.
Expensive industrial robots were first introduced exclusively to auto manufacturers in the 1960s, and by today, the robotics, automation and artificial intelligence industry has grown to over $200 billion. As automation costs decline and technology advances, applications for robotics and artificial intelligence have expanded, helping improve productivity across a range of industries. Looking ahead, the robotics, automation and artificial intelligence segment could grow to over $1 trillion by 2035.
Robotics and artificial intelligence has been a transformational technology. The declining costs in technology has driven increased robotics investments. Meanwhile, big data has fueled growth in artificial intelligence. The advancements touched upon many industries, helping improve areas like logistics automation, e-commerce growth and healthcare, among others.
Meanwhile, more money is being funneled into the space. We are witnessing increased merger and acquisition activity, and more startup funding is targeting the robotics segment.
When looking for opportunities in this up-and-coming segment, Jeremie Capron, Director of Research for ROBO Global, pointed to the technologies that investors may hone in on. For instance, computing, processing and artificial intelligence covers advances in algorithms, machine vision and natural language processing. There are also new developments in sensing or the ability the process sight, sound and movement. In actuation, we are seeing progress in electric, hydraulic, mechanical and pneumatic.
As investors can see, robotic technology is being deployed in a wide array of industries, including manufacturing, logistics and automation, 3D printing, consumer, security and surveillance, food and agriculture, healthcare and energy.
As a way to access diversified exposure to these various market segments, investors can look at something like the ROBO Global Robotics & Automation Index ETF (NASDAQ: ROBO), the original ETF dedicated to robotics investing.
The ROBO ETF follows the ROBO Global Robotics & Automation Index, which provides access to the entire value chain of robotics, automation and artificial intelligence. The ROBO Global Robotics & Automation Index is comprised of 97 global companies from 14 countries in North America, Europe, Asia and the Middle East and offers almost no overlap with traditional equity indices.
Robotics-related and automation-related companies include any technology, service or device that supports, aids or contributes to any type of robot, robotic action or automation system process, software or management. For instance, products and services include products that incorporate artificial intelligence, unmanned vehicles, software that enables virtualized product design and implementation, three-dimensional printers, navigation systems and medical robots or robotic instruments.
Top country weights include U.S. 40%, Japan 27%, Germany 9%, Taiwan 6% and Switzerland 5%. The portfolio includes a hefty tilt toward mid-caps 52%, followed by small-caps 25% and large-caps 23%, which reflects the focus on developing companies in the nascent space. Specifically, the underlying index may include 40% bellwether stocks and 60% non-bellwether stocks.
“The robotics and automation landscape is enabling a technological revolution that will fundamentally change how we work and live,” Studebaker said. “Robotics has transitioned from an industrial application to multiple applications across the entire economy. The ROBO Index provides diversified exposure to the entire value chain of robotics and automation.”
Financial advisors who are interested in learning more about robotics and artificial intelligence can watch the webcast here on demand.