Canadian investors in exchange-traded funds can now more easily access the fast-paced growth of robotics and automation, an industry that is rapidly finding its way into nearly every sector on the street.
With the ticker ROBO, the Horizons Robotics and Automation Index ETF hit the market on Wednesday, providing investors access to advanced robotics on a global scale. With a management fee of 0.75 per cent, the ETF seeks to replicate the ROBO global robotics and automation index.
"We could be witnessing the most transformative technological change of our lifetime as robotics and automation start to become integral to much of what we do on a daily basis," said Steve Hawkins, president and co-CEO of Horizons ETFs. "Despite the quick ascendency of the robotics, automation and artificial intelligence sectors, it's still in its very early days. This could be the largest untapped investment opportunity for Canadian investors, particularly since very few likely own these stocks in their equity portfolios."
The ROBO global index is made up of more than 80 stocks focused on the entire robotics and automation industry and tracks the performance of equity securities of robotics-related or automation-related companies.
As a rules-based index, it employs specific investment criteria focused on companies that derive a portion of revenue and profit from these equity securities. The companies span more than 14 countries, with 60 per cent of the index comprised of companies outside of North America.
"That's not by design, it's just where the technology exists," says Travis Briggs, CEO of Dallas, Tex.- based ROBO global in an interview with The Globe and Mail. "We just go where the market leads us and less than 2 per cent of these companies are found in traditional indices."
The global robotics-technology market is expected to reach $82.7-billion (U.S.) by 2020, according to a report by Allied Market Research. A similar ETF in the United States – also with the ticker ROBO – launched in 2013 on the Nasdaq. Year to date, the U.S. version of ROBO has been the fastest-growing ETF in that country, with almost $1.7-billion in assets under management as of Oct. 31, up from $134.7-million in January, 2017.
"Two years ago, [robotics and automation] was perceived as a niche or thematic market, but today investors are beginning to realize these technologies are foundational," Mr. Briggs said.
"Robotics is present in every industry and in a number of applications. It's found in manufacturing, health care with surgical robotics, consumer products and agriculture to name a few.
Nearly every company is now in a race to compete at a new level and respond to this disruption that these technologies can bring to their sectors."