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What's Powering This Robotics ETF

November 7, 2017 12:46 pm
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Robotics investing is one of 2017's hottest investment niches. Fortunately, this theme has become easier to access thanks to exchange traded funds including the Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ). BOTZ is up about 58 percent year-to-date, nearly double the gain posted by the Nasdaq-100 Index.

BOTZ, which tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index, is just 14 months old, but that lack of age is not preventing BOTZ from being a credible option for investors looking for exposure to the fast-growing artificial intelligence and robotics themes. Various companies from different corners of the robotics and artificial intelligence spaces are powering BOTZ higher. That includes Fanuc, the ETF's third-largest holding at a weight of 7.7 percent.

Fanuc “focuses on industrial automation and is one of the chief suppliers of robotic machinery to the Japanese and U.S. automobile industries,” according to Global X research. “The company largely focuses on developing computerized numerical control (CNC) systems, which are robotic machines that can be fed specific instructions and then execute on those instructions with a high degree of accuracy and efficiency. An example of these instructions could be to lift up a piece of sheet metal from a stack, press it into a specific shape, and weld it to a car frame.” 

In addition to Japan-based Fanuc, BOTZ is home to some well-known U.S. companies. Among the ETF's 29 holdings are semiconductor giant Nvidia Corporation (NASDAQ:NVDA) and Intuitive Surgical, Inc. (NASDAQ:ISRG), stocks that have returned 96 percent and 81.5 percent, respectively, year-to-date.

BOTZ features exposure to more than 10 industry groups, giving the ETF broad-based exposure to booming artificial intelligence and robotics trends. Industrial machinery stocks account for 29.5 percent of the fund's lineup, while electronic equipment makers and electronic components manufacturers combine for 23 percent.

“Health care is one non-industrial segment that is rapidly adopting robotics technology,” said Global X. “Companies such as Intuitive Surgical are pioneering robotic-assisted surgery in an effort to improve patient outcomes. The firm builds robotic devices used in minimally invasive surgeries including wristed instruments that can bend and rotate further than a human hand. These robotic devices enable surgeons to operate with enhanced vision, precision and control, which can lead to less damage to patients’ nerves, quicker healing and smaller scars versus the more traditional ‘human-only’ way of performing selected surgeries.”

Healthcare equipment stocks represent almost 10 percent of the BOTZ lineup.

A Torrid Pace

BOTZ is on a torrid pace of asset gathering. The ETF entered Monday with $1.07 billion in assets under management, $949.4 million of which have flowed into the fund this year. Since the start of the fourth quarter, investors have added nearly $393 million to BOTZ.

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