The cyclical industrial sector has had its share of struggles this year, but some robotics ETFs, which have heavy industrial exposure, are still performing well. For example, the Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ ) is up 12.31% year-to-date and there could be more upside coming for BOTZ and rival robotics funds.
BOTZ is considered a thematic ETF. A thematic approach includes investments that stand to benefit from structural change driven by demographic and technological changes. BOTZ, which debuted in September 2016, targets the Indxx Global Robotics & Artificial Intelligence Thematic Index.
The fund “seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles,” according to Global X.
“But one area of the industrial economy is still growing like gangbusters: robots reports Al Root for Barron’s. “Robotic automation is penetrating new processes in different industries, such as logistics and health care, so the outlook for robots continues to be bright, even as the economy slows.”
Robotics and artificial intelligence are making machines smarter and more capable than ever before, allowing robots to take on increasingly sophisticated tasks for faster and more accurate production. Several sub-groups of artificial intelligence and robotics spaces could be major drivers of the themes’ returns in the coming years, including industrial robots.
Boding well for BOTZ is data suggesting that orders for industrial robots are increasing.
“Orders and values diverge because smaller robots, including collaborative robots called co-bots designed to work safely beside humans, are growing faster than the largest, most expensive robot models,” according to Barron’s.
Robotics and artificial intelligence are making machines smarter and more capable than ever before, allowing robots to take on increasingly sophisticated tasks for faster and more accurate production.
Related: Catalysts That Could Catapult the BOTZ ETF Higher
Ten industries are represented among the 37 holdings in BOTZ with technology and industrial sectors looming large.
“Robot growth is good news for the industrial industry, but the robot business is still small in the grand scheme of things. The roughly $500 million in North American orders for the second quarter of 2019, for instance, represents much less than 1% of total capital spending by global industrial firms over the same span,” according to Barron’s.
