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Investment Profile

Investment Profile: Robots Rising

  • Robots Rising provides investors exposure to the growing robotics field
  • The fund’s assets include stocks from health care, tech, and industrial companies
  • Analysts predict that the robotics field will grow considerably in coming years
2 min read

Saddle up, partner, because the robotic hosts from Westworld are closer to becoming a reality than you think.

Spending on robotics is expected to double to about $230 billion over the next five years, according to industry analysts.

While that may usher in a new era of automatic house cleaning technology and self-driving cars, it also points to a potentially explosive industry for investors. You can get in on the action with Robots Rising, an exchange-traded fund (ETF) on Stash.

What’s in the fund?

Robots Rising is what Stash calls the  ROBO Global Robotics & Automation Index ETF (ticker: ROBO). The fund provides investors exposure to the burgeoning robotics industry with a broad approach to several industries, and tracks the Robo Global Robotics & Automation Index.

Companies in the fund produce technology, products, parts, and services for the robotics and automation-related industries. Robots Rising is the first benchmark index to target this industry, and has a very broad reach, spanning healthcare, consumer products, aerospace, and energy applications.

The fund includes stocks from 93 companies, spanning 15 countries. Among them are companies working on innovative cancer treatments, medical instruments, and new types of drones and combat robots.

Some of the bigger names in the fund are iRobot, the manufacturer of the Roomba, and leading defense contractor Northrop Grumman. Also included are tech companies like NVIDIA, Siemens, and Toshiba.

The majority of the fund’s holdings (58.8%) is in the industrials sector, and 29.8% is in technology. Geographically, the fund’s assets are concentrated in the U.S. (43.8%), Japan (26.26%), and Germany (8.44%).

Performance

The fund is managed by Exchange Traded Concepts and launched in 2013.

As technology related to robotics, automation, and artificial intelligence has become more accessible in recent years, many of the companies producing that technology have grown accordingly.

The fund’s annual return is down -2.4% year-to-date, according to Morningstar. The past two years, however, have delivered high returns–31.77% in 2017 and 41.49% in 2016.

Similar funds

There are other funds that focus on robotics. A similar fund, the Global X Robotics & Artificial Intelligence ETF (ticker: BOTZ) tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index.

BOTZ launched in September 2016. Because of that, we can’t get a good idea of how closely its performance has tracked that of Robots Rising.

Year-to-date, as of May 2018, Botz has had a -2.53%% return, according to Morningstar. And in 2017, its return was an electric 58.01%–beating Robots Rising’s 31.77%

Risks and considerations

While the robotics industry may have enormous potential, there are numerous things that could hamper its growth in coming years. The government could tamp down with new regulations, for example, in an effort to preserve jobs for people, or to increase safety for those working closely with robotic equipment.

Many of the companies contained in the fund are also not based in the U.S., meaning that foreign governments could also pass laws or regulations that affect the industry.

There’s also the threat of social pushback. Robotics and automation, particularly in industry and manufacturing, could replace human workers. Waves of layoffs could lead to serious economic and social unrest.

Robots Rising focuses on a niche of businesses, so it may not be good for investors seeking diversification. Most of the fund’s holdings are concentrated in tech stocks.

Finally, the fund has an expense ratio of 0.68%, which is somewhat higher than the industry average of 0.23%, according to industry data.

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By Sam Becker
Sam Becker is Stash's financial writer.

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