The robotics revolution is upon us. Robotics do encompass the cleaning segment, like with the self-vacuuming units sold by iRobot, but they also do so much more. With robotics, human safety is one of the top benefits, as we can send robots to dangerous mining locations, inhospitable planets like Mars, and into battle via pilotless drones. Additionally, accuracy and error minimization are highly sought-after features across all industries but specifically in medicine, wherein robots can be employed to perform precise surgery and neater stitching. The industry covers areas like medicine, agriculture, electric vehicles (EVs), manufacturing, and is estimated to be worth $178 billion by 2025.
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Big data is growing at an exponential rate, with the last two years producing more data than the entirety of human history before then. Companies need to utilize AI to mine, interpret, and analyze all this data and this is one of the things that is driving growth in the AI sector, which is estimated to be valued at $360 billion by 2025. AI data analysis can be used to pick stocks and commodities, power autonomous vehicles (AVs), and to power virtual assistants. Instead of cherry-picking your investments, we present you with three ETFs that cover a broad range of industries in the robotics, artificial intelligence (AI), and automation space.
1. Global Robotics and Automation ETF
The Global Robotics and Automation ETF (NYSE: ROBO) was the first-to-market fund in the field, making its debut in 2013. It invests in roughly 90 companies across 11 robotics subsectors like healthcare, manufacturing, and computing & AI. To minimize risk, it invests mainly in large- and mid-cap companies (nearly 85% of its holdings). Its top 3 holdings are Brooks Automation, which provides automation to manufacturers across various industries; Intuitive Surgical, which operates in the medical space; and Airtac International Group, a Chinese pneumatic device manufacturer. The ETF’s stock price is up over 70% year-over-year (YoY).
2. iShares Robotics and Artificial Intelligence ETF
The iShares Robotics and Artificial Intelligence Multisector ETF (NYSEARCA: IRBO) launched in 2018 and ‘tracks developed and emerging market companies that could benefit from the long-term growth and innovation in robotics and AI.’ That’s the fund’s rather cumbersome description on its prospectus but regardless of that, its stock price is up over 72% YoY. The fund’s top three holdings are Hengten Networks Group, an investment holding company that operates a smart community services platform; Teradata Corporation, a database and analytics-related software provider; and 3D Systems, which sells 3D printers, scanners, and materials.
3. First Trust Nasdaq Artificial Intelligence and Robotics ETF
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (NASDAQ: ROBT) uses the Consumer Technology Associations classification and rating system to select robotics and AI companies. These companies are then grouped into three categories: engagers, or companies offering products, services, or systems, representing 60% of all holdings; enablers, which are companies in advanced machinery, semiconductors, and machine learning, which comprise 25% and enhancers, companies that are not pure robotics or AI plays but still add value to the industry, at 15%.
The ETF’s top three holdings are Hexagon AB, a tech group focused on precision measuring technologies; Nuance Communications, a company that provides speech recognition and AI; and Obic Co Ltd, an integration and automation corporation. The fund’s stock price is up nearly 73% YoY.
Robotics offer companies efficiency, lower costs, and increased productivity. Amazon, for example, employs more than 200,000 mobile robots in its warehouse network to help it meet its growing fulfillment and delivery needs, which are a strong selling point for its Prime subscriptions. This is the future and it covers a wide range of industries and sectors. Investing in an ETF ensures that your investment is fully diversified and your risk minimized.
Summary of ETFs
|ETF||Price (5/3/21) ($)||Dividend ($)||Expense Ratio (%)|
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