ETF Securities’ ROBO Global Robotics and Automation GO UCITS ETF (LON: ROBO) has seen $52m inflows between 1-13th February, already a record inflow for a one-month period since its launch in 2014. YTD inflows stand at $81m, which has helped to increase AUM by 40% to $285m.
ROBO Global Robotics and Automation ETF AUM up by 40% YTD.
The fund, which offers broad global exposure to a basket of robotics and automation companies, has experienced impressive returns recently, rising 8.7% YTD and 50.0% over the past year. In September 2016, ROBO switched from synthetic replication to physical, a move that reduced the TER from 0.95% to 0.80% (see: ETF Securities’ robotics ETF to convert to physical; TER trimmed).
ROBO seeks to take advantage of the trend towards ever greater use of robotics and automation in the industrial, consumer and military sectors, with the global robotics market expected to grow to $226bn by 2021. As labour costs rise and the price of automation falls, companies are approaching a tipping point of rapid adoption of robotic technologies, with ageing populations and shrinking workforces in developed countries set to accelerate this trend.
Commenting on the performance of the fund, Howie Li, Co-Head of CANVAS at ETF Securities said, “While the US election and Trump’s “USA first” policies focused on manufacturing and production have helped boost the profile and growth prospects of companies in our Index, we believe the overarching long-term growth story embedded in this theme is driving the fundamentals. We expect interest to continue to grow.”
The ETF tracks the ROBO Global Robotics and Automation UCITS Index which is designed to track the performance of global equities with exposure to the themes of robotics and automation. The index seeks to include companies that incorporate a high degree of robotics or automation into their product or manufacturing process to improve efficiency, as well as companies producing equipment or software designed for robots. Potential index members are selected by a committee of experts and are then classified as either “bellwether” stocks comprised of firms whose main business is related to the robotics or automation sector, or “non-bellwether” stocks, which are companies with a significant portion of their business involved in robotics or automation. The index portfolio is then split 40-60 to bellwether and non-bellwether stocks.
On the construction of the index, Li said, “The ROBO Global team boasts an expert coverage team, a proprietary industry classification and an index methodology designed to capture the true value of this emerging sector. ROBO Global® have done the heavy lifting for investors by identifying 13 high value and high growth subsectors across the robotics and automation value-chain.”
The index currently has 81 components with a significant geography bias to the US and Japan, 72% in total, with Taiwan a distant third with 6%. The fund also has a small/mid-cap bias with large-cap firms (>$10bn) making up only 24% of the portfolio. The largest holding is iRobot at 2.66%
ROBO was the first and only European-listed ETF to offer exposure to the robotics sector until September 2016, when iShares launched the iShares Automation and Robotics UCITS ETF (LON: RBOT) with a TER of 0.4%, which has AUM of $135m as of 13th Feb.