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The UK is holding its first annual Robotics Week from 25 June until 1 July in recognition of UK robotics innovation. Robotics is considered to be one of the most important technologies to drive economic growth in the country.
Activities will be held across the UK to discuss developments in robotic technology and the role of robots and artificial intelligence in everyday life. It will also help to put the spotlight on investment opportunities in the robotics space.
Take the funds route
We believe the easiest way to get exposure to this theme is via traditional funds and exchange-traded funds. There are several products that provide access to a diversified portfolio of companies tapping the robotics space. Investors will really need to take a long-term approach to this sector, in our opinion.
ETF Securities has a product called ROBO Global Robotics &Automation GO UCITS ETF which trades an index linked to the performance of relevant companies. Constituents include Cyberdyne which has designed exoskeleton suits and whose shares more than doubled in price when it floated on the Tokyo Stock Exchange in 2014.
ETF Securities’ product also has exposure to the performance of Japan’s Keyence which makes automation sensors; as well as German systems provider Kuka which has approximately €3 billion annual sales across multiple industries.
ETF Securities’ robotics fund launched in late 2014 and performance has admittedly been volatile. The shares soared in early 2015 and then spent most of the year in freefall before experiencing a stop-start recovery.
‘The rapid rise of robotics and automation is fascinating and while it is easy to be caught up in the Ex Machina style hype, the investment case on its own remains highly compelling and the potential upside of robotics investment is not fully appreciated,’ insists Howie Li, co-head of ETF Securities’ CANVAS unit which runs its thematic funds.
‘It is estimated that by 2025, the robotics and automation sector will be worth $1.2 trillion. At the same time, worldwide annual supply of industrial robots is forecasted to grow by 15% year on year, making this industry a clear growth engine amidst a weak global economy.’
Li adds: ‘Investors who have identified this megatrend could be benefitting already, as all factors point to this growth continuing. Robotics and automation companies are modestly valued while debt levels have remained low. The opportunity reflects an attractive valuation and entry point for a long-term investment strategy that aims to capture the evolution of the sector.’
Other options
Investment fund Pictet Robotics-I GBP has stakes in companies that contribute to and/or profit from the value chain in robotics and enabling technologies. It particularly likes companies involved in sensors, microcontrollers, 3D printing and image, motion or voice recognition, among others.
Key names include robotic surgery pioneer Intuitive Surgical and Fanuc which provides automation products to automobile and electronics manufacturers.
The Pictet fund only launched in November 2015 so there is limited performance data. Year to date it is up 3.4%, according to Morningstar.
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