Future Outlook For BOTZ (NASDAQ:BOTZ)

Introduction

I give Global X Robotics & artificial intelligence Thematic ETF (NASDAQ:BOTZ) a buy rating. Working as a software engineer, and I believe the general person sees this as well, it is hard to miss that Robotics and artificial intelligence are the future. Additionally, I like the global diversification this ETF brings when the United States securities market has a very uncertain future. This stock is not for everyone. It is really for a small group of people interested in this area and who want to buy into an ETF. In essence, it is a vehicle into this sector. At the very least, this ETF provides a good list of interesting companies for everyone to look into, even if you choose not to invest in the ETF as a whole.

BOTZ tracks the Indxx Global Robotics & artificial intelligence Thematic Index. Since its creation, this ETF has averaged just over 14% per year in returns. Indxx has excellent documentation on how securities are selected; the short description is a company must receive more significant than 50% of its revenue from four categories: artificial intelligence (AI), Industrial Robots and Automation, Unmanned Vehicles and Drones, and Non-industrial Robotics. When I first looked into the ETF, I questioned why the Index did not include a company like $TSLA. The reason is that they do not have greater than 50% revenue from the above categories. Unlike some ETFs like ARK invests (NYSEARCA:ARKK), the Index is followed with no human say. So no matter how incredible of technology Tesla has and no matter how big of a player in the space it is, if the stock does not meet the inclusion criteria, it is not included.

Top Holdings

Currently, the top holdings are:

The top holdings and percent allocation will change as time progresses.

For readings on the top two holdings, check out their pages on Seeking Alpha. Additionally, I will link one article for NVIDIA and one for Intuitive Surgical.

Market Trends

BOTZ has tanked in price over the past month, just as the rest of the market has. The chart shows that BOTZ is a very volatile stock, and while this presents opportunities to swing trade, I do not think this is the best strategy for this stock. If you are investing in this stock, you believe in the core idea that artificial intelligence is the future.

Recently, the Fed said they would raise rates faster than many people expected, even going as far as to say they might raise them three times in 2022. When rates are increased, this typically leads to lowering the price of United States securities. Investors can get a better return on a bond, they are less likely to take on the higher risk found in securities for a reasonable return rate. This trend also occurs within the securities market. Investors move from riskier securities to safer securities. For this reason, the general outlook of stocks, especially ones in the United States, is negative. BOTZ helps counter the Fed through its global diversification. Still, the United States economy has a massive effect on all other economies and stock markets.

I think that BOTZ is a good long-term play, and at the very least, the companies inside warrant a further look. With what appears maybe a bear market forming, nobody should buy into security expecting to get a 10+% return over the next year. With that being said, I like this stock for the longer term, and I like that it is an ETF that will auto-rebalance for me. This is a good passive investment for someone looking to invest in this space precisely and does not want to pick individual companies or for someone who likes the foreign companies included and does not want to deal with investing in foreign markets.

Risks

The general market is very uncertain and may be heading into a bear market which should cause everyone to lower their return expectations. Outside of general market trends, this ETF closely follows only a very few companies, with the top being heavily weighted. If one or more of these companies were to perform poorly, it would drag down the whole ETF. Finally, with the world in a chip shortage, this could affect these companies if the shortage worsens.

Conclusion

I like this sector and believe it is the future. BOTZ is a vehicle to invest in this area easily. I do not think that BOTZ is the best investment in this space, but it is one of the only ETFs for this space. BOTZ offers investors global diversification in an incredibly fast-growing sector that will power the future. The ETF, or at least the companies within it, warrants a look from all investors.