The robotics, automation, and artificial intelligence sector—or RAAI—has been grabbing headlines as one of the most sought after investment opportunities of the decade. That opportunity has led to a flood of robotics-themed investment products hitting the market in the past 24 months. Navigating this expanding landscape can be a complex and time-consuming puzzle.
The challenge is by no means restricted to RAAI. Today, it seems there’s an index available to tackle nearly every theme and style an investor can dream up. In general, that’s good news. A larger menu means more choice, and the more options to choose from, the better. At the same time, understanding precisely what those options actually are can be a challenge—even for experienced investors and portfolio managers. While solution providers may be highly adept at defining and marketing a specific theme or investing style, it’s rare to find a prospectus that goes beyond the basics, such as how an index is constructed, how often it is rebalanced, the index turnover rate, performance history, and track record. But the finer details matter—especially if your goal is to utilize a product that tracks the index to bolster your core portfolio.
ROBO Global was the first to recognize the need to track robotics, automation, and artificial intelligence, and in 2013 became the first to launch an index to track the significant potential of the theme: the ROBO Global Robotics & Automation Index®. The index was built deliberately to be broad in scope and diversified across market cap, geography, and technologies to take advantage of the uniquely cyclical nature of pure-play and emerging pure-play technology providers. Our goal was to capitalize on the growth and contraction of each sector of the market over time. That strategy has delivered. Today, the ROBO Global Robotics & Automation Index has more than $2.5B in global assets under management, making it the largest dedicated robotics, automation, and AI index on the market today.
In the past four years, investors have become more sophisticated in their understanding of RAAI and its growth potential. In support of investor due diligence when researching and selecting a suitable strategy, ROBO Global has created a series of sub-indices to streamline the process of analyzing individual models and their ability to support specific investment goals.
The first round of sub-indices includes the following:
Thematic:
- ROBO Global® Robotics, Automation and AI High Revenue Index
- ROBO Global® Robotics, Automation and AI Growing Revenue Index
- ROBO Global® Robotics, Automation and AI Technology Index
- ROBO Global® Robotics, Automation and AI Applications Index
Geography:
- ROBO Global® Robotics, Automation and AI North America Index
- ROBO Global® Robotics, Automation and AI World ex-North America Index
- ROBO Global® Robotics, Automation and AI EMEA Index
- ROBO Global® Robotics, Automation and AI Japan Index
- ROBO Global® Robotics, Automation and AI Asia Index
Hedged:
- ROBO Global® Robotics, Automation and AI Hedged to USD Index
- ROBO Global® Robotics, Automation and AI Hedged to Yen Index (Currency: YEN)
- ROBO Global® Robotics, Automation and AI Hedged to GBP Index (Currency: GBP)
- ROBO Global® Robotics, Automation and AI Hedged to EUR Index (Currency: EUR)
To further support investor due diligence, Price Return and Total Net Returns versions of each index are also available, including 10 years of past-performance history. (Data prior to 16 June 2014 is based on simulated back-tested data.) Using this granular breakout of the index enables investors to more easily model and analyze each of the various components of the index and how each may help strengthen positions within a portfolio.
At ROBO Global, we still believe that the most efficient way to invest in robotics, automation, and AI is to invest broadly to help balance risk with reward across the sector. Toward that goal, ROBO Global invests across the global value chain of RAAI, investing in industry leaders with all levels of market capitalization, across all major geographic regions. In stark contrast to other strategies, the ROBO Global Robotics & Automation Index is modified equal-weighted—not capitalization-weighted. This weighting provides investors with equally diversified equity exposure, including more exposure to the small-cap and mid-cap companies that may have a higher growth potential.
Wise investors know that investing success is rooted not in chasing the latest trends, but in careful selection based on due diligence—including analysis to understand how the underlying holdings contribute to the strength of the overall portfolio. ROBO Global’s sub-index series is designed to do just that, and to give investors the ability to capture the potential growth across the sector more easily than ever.
By Richard Lightbound, CEO, EMEA, ROBO Global