Thematic investing: how to profit from the rise of robotics
Flows into robotics ETFs and mutual funds have accelerated significantly over the last 12 months, from an estimated $5.09 billion to $8.95 billion over this period, according to Bank of America Merrill Lynch.
There are only four robotics ETFs globally, two in the US and two in Europe, and since the start of the year they have grown from $415 million to $1.08 billion.
Rob Powell from BlackRock looks at how robotics can play an important role in your portfolio and where most of the growth is coming from. He says that these funds help investors gain exposure to a growing global demand for robots, with many big names, such as Google and Amazon, investing heavily into the sector.
He adds that investors are part of a wider phenomenon in interest in the robotics sector highlighted by the fact that searches for ‘automation and robotics’ have more than doubled over the last five years, showing an increase in global awareness (source: Google Trends).
The global supply of industrial robots has also been increasing steadily over the last 10 years, raising from 60,000 to 254,000 since 2009 (source: IFR World Robotics Report 2016).
But the robotics theme is much more than just use in industry. Robot usage is growing in everyday life, with the worldwide number of domestic household robots set to increase to 31 million between 2016 and 2019 (source: IFR World Robotics Report 2016).
In November 2016, UK Prime Minister Theresa May pledged to invest £2 billion to back the development of robotics and biotechnology, improving UK’s competitiveness in the global arena.
And, while developed economies are using robots to boost productivity, emerging markets are increasingly reliant on robotic technology. South Korea has a 35-year history of designing and building robots and an annual growth rate of robot manufacturing of 21% since 2008.
Rob Powell sums up that robotics has the power to disrupt existing industries, deliver cost savings and efficiencies as well as drive corporate profits for the next few decades.