Q&A With Gordon Pape: Robotic ETFs
Want to invest in the exciting field of robotics? Here are two ideas – and a caution.
Q – I have a question regarding stocks such as BOTZ and ROBO. Both are U.S. stocks involved in Automation/Robots, etc. My thinking is that this area is something that has potential, with everything I have read about the number of jobs that may disappear in the near future. My question was whether you had any insight on this type of stock. – Gord Z.
A – ROBO, which is listed on Nasqaq, was the first ETF to specialize in robotics and automation companies. The portfolio holds 92 positions in such firms from around the world and is highly diversified – only two stocks exceed 2 per cent of the total holdings.
Bellwether companies include ABB Ltd. of Switzerland, Accuray Inc., and Aerovironment Inc., both based in the U.S. A little over 44 per cent of the portfolio is U.S. based with about 34 per cent in Asia and 19 per cent in Europe. About three-quarters of the holdings are in small- and mid-cap companies, which by definition makes this a higher-risk investment.
This ETF has performed well so far in 2017 with a gain of 26 per cent to the end of July. It is currently trading near its all-time high. The management expense ratio is 0.95 per cent.
BOTZ is the symbol for Global X Robotics and Artificial Intelligence ETF, which also trades on Nasdaq. It is a smaller fund than ROBO, with a lower MER at 0.68 per cent. It was launched in September of 2016. The fund holds fewer stocks and makes bigger bets on individual holdings. For example, Mitsubishi Electric makes up 7.77 per cent of the portfolio, closely followed by Fanuc Corp. (7.75 per cent), and Nividia Corp. (7.45 per cent).
Either fund would be suitable for investors who want to take a long-term position to this exciting sector but don’t want to zero in on individual companies. But keep in mind they are likely to be volatile. Both are too new to have any performance history in down markets.
Do you have a money question you’d like to ask Gordon? Find out how to submit it here and then check out our Money section regularly to see if it was chosen for a response. Sorry, we cannot send personal answers.