Robotics ETF's Bet on Automation

Robotics ETF’s Bet on Automation

One would be forgiven for casting a skeptical eye on investing in robotics companies, given the dips in the tech sector this year. The largest tech exchange traded fund, State Street Global Advisors’ SPDR Technology Sector Selection (XLE) FundIt has lost 27% so far in 2022.

Count Lauren Heine, head of relationship advisors at Dallas-based ROBO Global, is among those who see dips as darkness before dawn. Hin, from chatting With Sumit Roy and Heather Bell of ETF.com last week, he saw explosive growth in robotics and automation, his conjoined twin. Just look at the numbers, said Hein, who previously served as managing director of Pacer ETFs and regional director of Global X ETFs.

According to some industry estimates, [there are] She said about 20,000 warehouses in the United States, and only 20 percent of them use some level of automation, noting that automation could include everything from conveyor belts to the first generation of robots that move around the warehouse.

$1.1 billion for ROBO ROBO Global Robotics and Automation Index ETF (ROBO) It is the main fund of the company. Its other products focus on artificial intelligence and innovation in healthcare.

wide perspective

“We cover the entire ecosystem of automation,” Haynes said. The fund tracks ROBO’s global robotics and automation index, which includes 82 companies. They range from 3D printing to food and agriculture to manufacturing and industrial automation. She said the index also tracks component makers.

performance

ROBO is down more than 37% year-to-date, less than the decline of other funds such as ARK Innovation ETF (ARKK)Another fund focused on disruptive innovation, albeit on a larger scale.

Hein noted that the ROBO portfolio invests only 45% in information technology, with another 40% in industries and about 10% in healthcare. While the fund’s forward P/E was 36 last fall, Hein said it’s currently about 20, and from a historical perspective, the fund’s nine-year track record has generally remained at about 22.

“When you combine that with the fact that we continue to see companies in ROBO achieve growth of approximately 35% higher than the estimated average sales growth for the next 12 months, there is a lot of opportunity that we think will continue into the future,” added Hein.

She noted that supply chain disruption has been difficult for automation companies, as it has made it difficult to source different components and subsequently deliver orders.

However, the semiconductor shortage looks like it will be alleviated at least somewhat given the approval over the summer of a bill allocating $52 billion for domestic semiconductor manufacturing and building new manufacturing plants — somewhat ironically, semiconductor manufacturing is such a process. Minutes, Hein adds that the factories will be built by … robots.

growth rate

Hein noted that ROBO Global puts the future growth rate of the entire automation ecosystem at 12%-13% and said it is still accelerating.

She noted that inflation and labor shortages are areas of concern in the economy and that automation addresses both of these issues, as it can fill the gaps left by labor shortages and ease supply chain logistical problems.

She cited how the UK-based Ocado Group, one of the companies in the ROBO portfolio, introduced a “swarm” of AI-controlled robots inside the warehouse. The company’s technology is already in use in the UK, and through a deal with Kroger, it will be used in warehouses in the US in the future.

“Even by solving the problem of not having enough semiconductors, we have to build factories that will be primarily made by robot,” she said.

Contact Heather Bell at heather.bell@etf.com

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