robotic

The BOTZ ETF has gained 54% so far in 2017, driven by stocks such as NVIDIA, Intuitive Surgical, iRobot, KUKA, and FANUC.

Demand for industrial robotics has been soaring as companies across the globe adopt them in order to increase efficiency. Likewise, consumers are increasingly scooping up robots — such as the ones made by iRobot (NASDAQ:IRBT) — to perform household tasks like vacuuming.

Thanks to tremendous recent advances in artificial intelligence (AI) by companies such as NVIDIA (NASDAQ:NVDA), the complexity of tasks that robots can perform is expanding as we zoom closer to a Jetsons-like reality where cars drive themselves, among other things.

Investors who are interested in the burgeoning and interrelated robotics and AI spaces, but don’t want to bet on just one or two players, might want to consider the Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ), often referred to as “BOTZ,” which is its stock ticker symbol.

Here’s what you should know about the BOTZ ETF.

The Global X Robotics & Artificial Intelligence ETF: Performance & the basics

Before we dive in, you surely want to know how this ETF has been performing, right? The fund, which was started last September, has gained 54% in 2017, through Oct. 20, crushing the overall market, which has returned nearly 17%.

For some context, included in the chart below are the Global X Robotics & Artificial Intelligence ETF’s top five holdings, and competing ETF, ROBO Global Robotics & Automation Index ETF (NASDAQ:ROBO). ROBO, which was the first robotics ETF, currently has 91 holdings, so it’s much more diversified than BOTZ, which has 28 holdings.

chart
DATA BY YCHARTS.

The BOTZ ETF invests in companies poised to benefit from increased adoption and use of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles. BOTZ is an index fund, meaning its goal is to track the performance of the underlying index.

Given rising investor interest in robotics and AI, the fund has been growing very quickly. It had more than $912 million assets under management as of Oct. 20, up from about $176 million at the end of the second quarter. The fund’s current expense ratio is 0.68%, which is fairly reasonable.

The BOTZ ETF’s top 10 holdings

Holding No.  Company  Market Cap  Headquarters  Weight (% of Portfolio)
 1  NVIDIA  $118.1 billion  U.S.  8.03%
2  Keyence  $64.3 billion  Japan  7.66%
3  Mitsubishi Electric  $36.0 billion  Japan  7.62%
4  Intuitive Surgical  $41.3 billion  U.S.  7.51%
5  FANUC  $43.3 billion  Japan  7.31%
6  KUKA  $10.8 billion  Germany  7.26%
7  YASKAWA Electric  $9.6 billion  Japan  6.65%
8  ABB  $54.4 billion  Switzerland  6.49%
9  Omron  $11.7 billion  Japan  5.14%
10  SMC  $24.4 billion  Japan  4.73%

DATA SOURCES: GLOBAL X AND YAHOO! FINANCE. DATA AS OF 10/20/17.

iRobot, the ETF’s 19th largest holding, deserves special mention. The company, best known for its top-selling Roomba robotic vacuum, is the only consumer robotics play among the ETF’s holdings, to my knowledge. So, investors wanting to bet on the consumer robotics niche may want to further explore the stock. iRobot’s stock has pulled back from its summer highs thanks to concerns about competition from new entrant SharkNinja, but it’s still up 30.5% in 2017, though Oct. 20.

Turning to BOTZ’s top five holdings: NVIDIA, the fund’s top holding, has transformed itself in recent years from a company heavily focused on graphics processors for computer gaming and professional design applications into a company that’s also a player in AI. NVIDIA’s graphics processing unit-based approach to the branch of AI known as deep learning has driven growth in its data center business, and it’s in the early stages of igniting growth in its auto business from the emergence of self-driving vehicles. In deep learning, an artificial neural network is trained in how to make inferences like humans do, and then it’s deployed, where it makes inferences from new data.

Keyence develops and manufactures factory automation solutions. Mitsubishi Electric offers systems for homes, offices, factories, society infrastructure, and space, including electric and energy systems, home appliances, information and communication systems, industrial automation systems, and electronic devices. Intuitive Surgical is the leader in robotic-assisted, minimally invasive surgery. Lastly, FANUC specializes in factory automation.

A solid option for AI & robotics investors

The Global X Robotics & Artificial Intelligence ETF, or BOTZ, does a solid job of representing a good global mix of robotics and AI players without being too diversified. It seems to be an attractive option for investors who want broad exposure to the fast-growing and interrelated AI and robotics realms. As previously mentioned, the ETF’s expense ratio is a moderately reasonable 0.68%.

Like Artificial Intelligence & Robotics Stocks? The “BOTZ” ETF Is Worth Considering

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