Market Overview

iShares Enters Robotics ETF Fray

iShares Enters Robotics ETF Fray

BlackRock, Inc.'s (NYSE: BLK) iShares unit, the world's largest issuer of exchange traded funds, entered the artificial intelligence and robotics arena Thursday with a new ETF.

The iShares Robotics and Artificial Intelligence ETF (NYSE:IRBO) is the newest iShares ETF and the issuer's first focusing on the burgeoning AI and robotics investment themes.

What Happened

The AI and robotics ETF landscape is growing in terms of population and the two largest funds in the segment combine for nearly $4.5 billion in assets under management.

IRBO tracks the NYSE FactSet Global Robotics and Artificial Intelligence Index. That benchmark is “composed of developed and emerging market companies that could benefit from the long-term growth and innovation in robotics technologies and artificial intelligence,” according to iShares.

The new ETF's 90 holdings are equally weighted, a methodology that can help investors avoid single stock risk.

Why It's Important

“Robotics and artificial intelligence represent a long-term transformational shift, affecting the way businesses operate – and how people live. Investors may be able to benefit from these changes for the long term,” said BlackRock. “Robotics already has long-established industrial applications, but advancements in the field are expanding into surgical and consumer applications.”

AI and robotics funds have attracted over $20 billion in assets over the past several years as investors look for efficient ways to tap what is being dubbed “the fourth industrial revolution.”

Many robotics ETFs are heavily allocated to the technology and industrial sectors. IRBO keeps with that theme as technology and industrial stocks represent 76.48 percent and 15.05 percent of the new ETF's roster, respectively.

Familiar names among IRBO's top 10 holdings include Netflix, Inc. (NASDAQ: NFLX), Twitter Inc. (NYSE: TWTR) and Facebook Inc. (NASDAQ: FB).

What's Next

As is the case with any new ETF, time will tell if IRBO gains traction with investors, but the ETF does have at least notable selling point in its favor.

IRBO's annual fee is 0.47 percent, or $47 on a $10,000 investment. The two largest AI and robotics ETFs charge 0.68 percent per year and 0.95 percent. A robotics ETF that debuted in February charges 0.65 percent, indicating IRBO is favorably priced relative to established competitors.

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