The world of robotics is thriving, set to reach a remarkable $169.8 billion with a 15.1% CAGR by 2032. The U.S., a leading global player, is anticipated to amass a staggering $784.6 billion solely from robotics in 2024. This surge can be attributed to the rapid advancements in artificial intelligence (AI) and automation, particularly generative AI, capturing headlines and investors’ attention.
Amidst this whirlwind, money is flowing into robotics companies. Notably, Serve Robotics (SERV) saw its stock catapult over 300% within a month following a hefty $3.7 million investment from NVIDIA (NVDA). This move signified a bullish outlook on the potential of this emerging sector.
If delving into the realm of robotics investing is on your mind, fret not about single stock speculation. Exchange-traded funds (ETFs) provide a more diversified avenue for investors to ride this megatrend wave. Let’s explore three standout ETFs that offer distinct approaches to investing in the robotics and AI domain.
ROBO Global Robotics & Automation Index ETF (ROBO)
Standing tall since its inception in 2013, the ROBO Global Robotics & Automation Index ETF (ROBO) holds its ground as a stalwart choice for investors eyeing exposure to the robotics and automation sectors. With $1.07 billion in assets under management, ROBO stands as one of the largest and most seasoned robotics ETFs in the market.
ROBO traces the ROBO Global Robotics and Automation Index, which evaluates the performance of firms in the global robotics and automation landscape. The ETF boasts a well-rounded portfolio of 79 stocks, with no single holding exceeding 2.2% of the fund’s value.
Although ROBO’s performance has exhibited a mixed bag in recent times, showcasing both promises and underperformances vis-a-vis the broader S&P 500 Index, the recent slight pullback could present an appealing entry point for investors.
Additionally, with an expense ratio of 0.95%, albeit relatively high, investors garner a small dividend yield of 0.05%, aligning with the fund’s specialized focus.
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
For those seeking exposure to the burgeoning AI and robotics sectors, the First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) emerges as an enticing choice. Launched in 2018, ROBT tracks the Nasdaq CTA Artificial Intelligence and Robotics Index, spotlighting companies engaged in AI, robotics, and automation across diverse industries.
Despite being a smaller fund with an AUM of around $463.7 million, ROBT has been steadily gaining momentum, reflecting a net inflow of $30.56 million over the last year. This surge underscores the escalating investor interest in the potential of AI and robotics technologies.
One of ROBT’s strengths lies in its diversified portfolio of 114 stocks, offering broad sector exposure while curbing single-stock risks. In addition, the fund’s passive management approach endeavors to replicate the performance of its underlying index.
Harnessing a competitive expense ratio of 0.65% and a modest dividend yield of 0.28%, ROBT positions itself as a balanced investment avenue for those eyeing AI and robotics while mitigating individual stock vulnerabilities.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
Catering to investors eyeing the growth prospects of robotics and AI, the Global X Robotics & Artificial Intelligence ETF (BOTZ) emerges as a prominent choice. Launched in 2016, BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic v2 Index, focusing on companies poised to benefit from the increased adoption of robotics and artificial intelligence.
With a substantial asset base of $2.55 billion, BOTZ stands tall as one of the leading robotics ETFs in the market. The fund boasts a concentrated portfolio of 44 stocks, with large-cap companies dominating 51.5% of its holdings.
Performance-wise, BOTZ has exhibited a gradual upward trajectory over the past year, with a 52-week gain of 15.1%. Although its 2024 performance has been relatively moderate, with a 4.8% gain, the ETF has outperformed rival robotics ETFs, likely due to its notable exposure to NVIDIA.
BOZ further reflects its investor-friendly nature through a competitive expense ratio of 0.68% and a modest dividend yield of 0.16%, catering more to growth-oriented investors than income-seekers.
Conclusion
Embracing the dynamic landscape of robotics, automation, and AI, investing in ETFs like ROBO, ROBT, and BOTZ unravels a smart strategy to tap into this riveting trend. Each ETF boasts its unique flavor, from ROBO’s holistic market approach to BOTZ’s focused bet on industry leaders. While returns may have been modest thus far, the explosive growth potential in the robotics and AI realm renders these ETFs a compelling choice for patient investors eyeing a longer-term horizon.