By Todd Shriber
Sometimes, an exchange-traded fund (ETF) focused on a narrow or highly specialized investment theme, also known as niche ETF, proves its doubters wrong. That is certainly true of the ROBO Global Robotics and Automation Index ETF (ROBO). Still a couple of months shy of its fourth anniversary, the ROBO Global Robotics and Automation Index ETF is now a $1 billion fund. To be precise, ROBO has $1.05 billion in assets under management, according to issuer data.
ROBO follows the ROBO Global Robotics & Automation Index, “which is the brainchild of a team deeply entrenched in the robotics industry who created the innovative methodology,” according to Dallas-based ROBO Global. “The index and subsequent ETF offer investors access to the entire value chain of robotics, automation and artificial intelligence. The ROBO Global Robotics & Automation Index is comprised of 83 global companies from 14 countries in North America, Europe, Asia and the Middle East and offers almost no overlap with traditional equity indices.” (See also: Robot ETFs Are Coming of Age.)
Funds in Europe and Asia track the same index as ROBO, and some of those products have found success as well, bringing the combined assets allocated to the ROBO Global Index to $1.6 billion, according to ROBO Global.
More important than its asset-gathering acumen is ROBO’s performance. Amid surging demand for robotics technologies, the ETF is up 23.5% year to date and 32.2% over the past year. Demand for robotics is surging across a variety of industries, potentially boding well for ROBO as a long-term investment. The global automotive robotics market is expected to grow at a compound annual growth rate (CAGR) of more than 11% through 2024, while the food robotics industry could top $3.6 billion by 2023. (See also: Why Robot Stocks Will Rise in the Age of Trump.)
“The industrial robotics market is expected to grow from $38.11 billion in 2016 to $71.72 billion by 2023, at a CAGR of 9.60% between 2017 and 2023,” according to the Industrial Robotics Market – Global Forecast to 2023. “The increase in investments for automation in various industries, such as automotive, electrical and electronics, and metals and machinery, and the growing demand for industrial robotics systems from small and medium-scale enterprises in developing countries are the key factors driving the market.”
ROBO has a competitor in the form of the Global X Robotics & Artificial Intelligence ETF (BOTZ). Proving that investors are warming to the robotics investment theme, BOTZ is just 11 months old and has $315.5 million in assets under management. (See also: Investing in Robotics Through ETFs and Stocks.)