Robots and artificial intelligence (AI) are increasingly gaining precedence in our daily life. The pandemic-driven stay-at-home trend made it more important as we have become more dependent on the technology. The growing accessibility and falling costs are also making the space more demanding and lucrative. The global robotics technology market size was valued at $62.75 billion in 2019, and is projected to reach $189.36 billion by 2027, at a CAGR of 13.5%, per Allied Market Research.
No wonder, AI-related investing tools like Global X Artificial Intelligence & Technology ETF (AIQ – Free Report) , ROBO Global Robotics & Automation ETF (ROBO – Free Report) , iShares Robotics and Artificial (IRBO – Free Report) and First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT – Free Report) are hot bets now.
How Hot Artificial Intelligence as An Investing Area?
The global market for industrial robots was sized at about $43.8 billion in 2021. The market is likely to see a CAGR of around 10%, reaching almost 70.6 billion U.S. dollars by 2028, per Statista. Artificial intelligence can transform the productivity and GDP potential of the global economy, per a PWC article.
PWC’s research reveals that 45% of total economic gains by 2030 will come from product enhancements, boosting consumer demand. This will be possible because AI will bring about product variety, with increased personalization and affordability. The maximum economic benefit from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost), per PWC.
Ark Investment Management founder Cathie Wood also sees it as a fast-growing area. “We were assuming that in the next 10 years, artificial intelligence would deliver, in the enterprise software space, a market cap opportunity of $30 trillion,” the star stockpicker said at a Milken Institute conference last month. “Our new number is $80 trillion,” per Cathie Wood, as quoted on a MoneyWise article.
Despite taking a beating (down 4.8%) this year, Ark Investment’s star product Ark Innovation ETF (ARKK – Free Report) has gained 245.6% in the past two-year period, breezing past the S&P 500’s return of 85.9%. No wonder, Cathie Wood has created a great fan following (read: Follow Cathie Wood With These Stocks & ETFs).
ETFs in Detail
The ROBO Global Robotics and Automation Index ETF
The ROBO Global Robotics and Automation Index ETF is the first ETF in the space, following the ROBO Global Robotics and Automation Index, which measures the performance of companies which derive a portion of revenues and profits from robotics-related or automation-related products or services.
ROBO invests in 83 global companies that are driving transformative innovations in robotics, automation, and AI. Irhythm Technologies, Brooks Automation and Stratasys are its top holdings. The $1.96 billion-fund ROBO charges 95 bps in fees.
The Global X Robotics & Artificial Intelligence ETF
The Global X Robotics & Artificial Intelligence ETF is the largest product in the space, with more than $2.82 billion in assets. The fund follows the Indxx Global Robotics & Artificial Intelligence Thematic Index invests in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles.
NVIDIA (11.50%), KEYENCE (8.60%) and Intuitive Surgical (8.30%) get the highest allocations in the portfolio of BOTZ. The fund charges 68 bps in fees.
iShares Robotics and Artificial Intelligence Multisector ETF
iShares Robotics and Artificial Intelligence Multisector ETF has amassed about $459 million in assets. IRBOis the cheapest product in the space charging only 47 bps in fees.
iShares Robotics and Artificial Intelligence Multisector ETF follows an equal-weighted index. HTC, Alchip Technologies and Ambarella are among the top holdings.
First Trust Nasdaq Artificial Intelligence and Robotics ETF
The First Trust Nasdaq Artificial Intelligence and Robotics ETF follows the underlying Nasdaq CTA Artificial Intelligence and Robotics Index, which is designed to track the performance of companies engaged in Artificial intelligence, robotics and automation.
The $291.8-million-fund follows a modified equal-weighted index. The fund ROBT charges 65 bps in fees.