Amid the pandemic, ROBO Global offers a silver lining

29 Apr, 2020

Amid the pandemic, ROBO Global offers a silver lining

By Richard Lightbound, ROBO Global

 

The COVID-19 pandemic has delivered its share of surprises. While scientists and researchers have predicted a pandemic of this proportion for years (this Bill Gates TedTalk from 2015 offers some fascinating background), once the coronavirus hit, nations around the globe were woefully unprepared. While the virus certainly caught the world off guard, there have come some notably positive surprises in the form of human caring and resilience. Doctors and nurses on the frontlines are being applauded from balconies and rooftops. Grocery workers, now deemed essential, are receiving thank you notes and meal deliveries from grateful customers. Musicians are coming together to deliver free online performances on a grand scale.

Of course, there have been surprises in the investment world as well. Months ago, no one could have predicted that oil would drop below $0/barrel or that the stock market would drop to wipe away much of the gains of the past three years. And yet, at ROBO Global, the outperformance of our strategy versus global equities in the wake of the current economic challenges has us feeling confident about the future. While our strategy has always been aimed at the inevitable long-term growth within the theme of robotics, automation, and AI (RAAI), we have been pleasantly surprised at the short-term performance of the indices, even as the markets in general have declined. The numbers are testament to the strength of our research-driven approach and best-in-class index members with strong balance sheets (see First Quarter in Review: ROBO Global Innovation Indices). This has truly been a period highlighting to investors that not all investment strategies around disruptive technology are created equally.

Across the three ROBO Global index strategies—Robotics & Automation (ROBO), Healthcare Technology & Innovation (HTEC), and Artificial Intelligence (THNQ)—42 companies in the indices are reporting returns in excess of 10% YTD[1]. And while all three indices are performing as we had hoped, HTEC stands out ahead of the pack, delivering positive returns YTD even as other sectors continue to fall far below recent market highs.[2]

The healthcare sector was proving its worth as a growth driver long before COVID-19 became a threat. When we launched the HTEC index in June 2019, we did so because we anticipated a rapid growth trajectory across several key areas of healthcare technology. Our goal: to capture the growth and returns opportunity presented by the convergence of robotics, machine intelligence, and life sciences.

RELATED: Investing in healthcare technology and innovation

What we could not have anticipated at the time was the surprise of a global pandemic and its ability to push HTEC to an even greater rate of acceleration. Healthcare technology has been in the spotlight since the earliest days of COVID-19, and in the past few months it has become one of the most important areas of research and development the world over. Using sequencers from HTEC index member Illumina, scientists were able to identify and make the genomic profile of the 2019-nCoV publicly available—the first step in the development of diagnostic tests, treatments, and vaccines. Illumina is also working with the Chinese CDC to prepare protocols and training for coronavirus next-generation sequencing. HTEC index member Regeneron, specialists in treatments for emerging infectious diseases, developed a potential cure for Ebola in just 6 months in 2014. Today, the company is testing its anti-inflammatory drug Kevzara (sold in partnership with French pharmaceutical maker Sanofi) as a potential treatment for COVID-19.

As many countries remain under stay-at-home orders, telehealth services are making it possible for patients with all sorts of healthcare needs to seek treatment without the need to physically visit a healthcare office. According to our recent survey, telemedicine utilization has tripled from its pre-pandemic run-rate. The result has been outstanding returns within the telehealth sector, which has delivered YTD total returns of +59%.2

HTEC index member Teladoc is the current frontrunner in the space. The top performer in the HTEC index, Teladoc has delivered returns of 131% YTD[3]—a level of growth that was almost unimaginable prior to the coronavirus outbreak. Teladoc recently announced an “unprecedented surge in demand” for its telehealth services, with requests for virtual medical visits exceeding 20,000 per day in the US alone[4]—with 60% of current visits by customers who are new to the platform. The ability of Teladoc to meet such a rapid rise in demand is a testament to the company’s technology proficiency and to its ability to remain a key services provider long after the pandemic has finally come to an end. (For more on healthcare technology and innovation and the opportunity for investors, see our recent article on HTEC index member Ping An Healthcare & Technology, as well as our other commentaries on the topic here.)

Teladoc is just one example of the many innovative index members that are fueling the performance of the ROBO Global indices. While investors in RAAI are wise to focus on capturing the long-term growth of emerging technologies and companies in the theme, this acceleration in telemedicine adoption is an important reminder of just how rapidly things can change—and the value of investing in a portfolio that is designed specifically to capture growth across a quickly evolving landscape.

This year, our ROBO index will celebrate 7 years since inception, and in that time it has returned an annualized return of 8.97%, significantly higher than the ACWI’s 5.41%.[5] That comes as no surprise to our ROBO Global team that spends our days investigating the latest innovations and identifying companies large and small that are poised to become tomorrow’s market leaders. The ROBO Global strategy is working well. As we look past the current crisis and toward the future, we anticipate some of the greatest surprises ahead in the form of accelerated growth across the ROBO Global index series.

 

 

ROBO Global currently offers three innovative index portfolios, including our Robotics & Automation Index (ROBO)Healthcare Technology & Innovation Index (HTEC), and Artificial Intelligence Index (THNQ). To learn more, visit our website at www.roboglobal.com.

 

 

[1] As of 24 April 2020. Source: ROBO Global, S&P CapitaliQ

[2] As of 24 April 2020. Source: ROBO Global, Solactive

[3] As of 24 April 2020. Source: ROBO Global, S&P CapitaliQ

[4] “Teladoc Health Previews First-Quarter 2020 Results,” Teladoc Press Release, 4/14/20

[5] As of 24 April 2020, Sources: ROBO Global, Solactive, Refinitiv

 

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