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  • Tricks
  • disruptive innovation
  • robotics

OPTO Sessions Richard Lightbound on Robo Global’s successful selection strategy

Lightbound left western shores for Hong Kong in the 1990s, subsequently joining TradeCard, a now defunct US software firm, in 1999. The move was meant to be temporary, but lasted 15 years. It ended with a five-year stint at Standard Chartered Bank where, as a leader in transaction banking, Lightbound learned the intricacies of the Asian markets.

It took a leap of faith to give that up and start index, advisory and research firm Robo Global along with a team of advisors. “It was a bit of a leap of faith for us to start Robo global. We're so glad we did.”

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Robo Global specialises in identifying investment opportunities in the fast-growing robotics, artificial intelligence, and healthcare technology sectors. “We were the first to [boot] a robotics and automation strategy into the market back in 2013,” recalls Lightbound. “We're trying to capture areas where over the next five to 10 years, we're going to see some rapid development and advancement.”

The firm works with a group of PhDs, who advise ROBO on emerging technologies and the subsectors within disruptive innovation that they should trackFour of them are regulars at Jeff Bezos’ ‘Mars’ gatherings of the leading minds in robotics. It is no surprise, then, that its indices have accrued close to $5bn worth of assets tracking them.

Lightbound said that the firm’s definition of disruptive stocks extends to technology with an overarching impact across sectors. Companies and technologies included in the Robo Global portfolio are expected to significantly change a number of industries or even result in creating new ones. Technology that is “very narrow for us is not disruptive innovation. It's got to be broad, large and long-lasting.”

“We were the first to [boot] a robotics and automation strategy into the market back in 2013. We're trying to capture areas where over the next five to 10 years, we're going to see some rapid development and advancement”

 

The firm has identified 11 sub-sectors to focus on. Lightbound is particularly bullish on genomic, telehealth and automation – especially in areas where the labour crunch is driving a need for robotic intervention.

However, it is still a far cry to think robots will replace people. Lightbound gives the example of surgical robots that make it easier to operate, but surgeons will still be wielding the controls.

Robo Global shortlists companies to include in its indices and the weightage to assign them through a scoring system. At the outset, the company must fit in one of the 11 subsets and meet the environmental, social and governance or ESG criteria. Lightbound and the team have an internal process to collate and mark companies for their ESG compliance. Failing these eliminates the company altogether.

Then each company is assigned a score of 1-100 based on revenue purity (e.g. how much revenue is from robotics); technology quality; market leadership; and investment patterns in capital expenditure, talent and customer acquisition. If the score is higher than 50, the company is included in the Robo Global portfolio.“We think it's critical to take broad diversified exposure,” said Lightbound, “Across the multiple sub-sectors that we cover in each theme, we know that there is a significant growth and returns opportunity over a multi-year period.”

“For us [this] has proven to be a really effective way to capture the growth and returns over a multi-year year period, but also to smooth out the ride for investors”

 

Robo Global rebalances its company weights every quarter. “For us [this] has proven to be a really effective way to capture the growth and returns over a multi-year year period, but also to smooth out the ride for investors.”

 

To hear more insights from Lightbound, listen to the full episode on Opto Sessions.

 

And for more ways to listen:

 

Listen to the full interview and explore our past episodes on Opto Sessions. You can also check out all our episodes via our YouTube Channel.

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