Delivering Cutting Edge Industry Insight And Competitive Intelligence

Smooth Tomorrow's Market Volatility With a Smart Approach to Robotics & AI

Every advisor knows that volatility can wreak havoc on your clients’ psyches, and managing this “risk” or “sleep factor” can be challenging.

These days, every friend, co-worker, and neighbor is more than happy to share a great investment success story. Everyone is thrilled to recount the details of a winning trade, but no one (and I mean no one) willingly brings up their latest loss—especially not over cocktails. That means that when the market shifts (and yes, it will shift), one of your biggest challenges will be managing your clients’ emotions.

One step you can take today to help smooth the ride for your clients while getting them excited about the future is to introduce a strategy that targets one of today’s fastest-growing sectors: robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). Even better, the ROBO Global Robotics & Automation Index is specifically designed to deliver this growth with attractive risk-adjusted returns.

While RAAI is fascinating in general (who doesn’t get excited when talking about real-life robots?!), what’s exciting about RAAI from an investor's perspective is that its applications are fundamental to the growth of nearly every industry. Logistics. Healthcare. Consumer goods. Retail. Technology. The list goes on. All of these industries are depending on robotics and artificial intelligence (AI) to deliver the automation they need to compete in the future in every region around the globe. Because that reach is so extensive, the potential for growth is tremendous. For investors, that makes investing in the ROBO Global Robotics and Automation Index an attractive strategy to capitalize on the potential for growth while managing risk and, perhaps, even fuel a more enjoyable cocktail party.

Related: Rosie the Robot, Amazon, and the Future of RAAI

What’s important to remember is that, even in an industry with explosive growth, there will always be extreme winners and extreme losers. And attempting to determine the winners from the losers is a risky proposition, especially in an industry that is going through exponential change. We’ve all seen major players fall from the top of the heap to the bottom in what seems like an instant. Consider this list: Netflix vs. BlockBuster; Amazon vs. Borders; Uber vs. taxis; Google vs. Yahoo. In each case, no one could have predicted the victor until the game was nearly over. Investors who placed their bets on the winners reaped fantastic rewards. And those who bet on the losers? Let’s just say they probably weren’t chatting about their losses at happy hour.

To help investors balance risk with reward across the sector, ROBO Global invests across the global value chain of RAAI, investing in industry leaders with all levels of market capitalization, across all major geographic regions. In stark contrast to other strategies, the ROBO Global Robotics & Automation Index is modified equal-weighted—not capitalization-weighted. The reason? This weighting provides investors with equally diversified equity exposure, including more exposure to the small-cap and mid-cap companies that may have a higher growth potential.

That may all sound great when we’re talking about winners and losers within the sector, but what if your client is concerned about a broad market downturn?

During a downturn, either within a sector or across the market as a whole, companies with the largest market cap and expensive valuations may suffer the greatest loss. That puts funds that invest primarily or solely in these stocks at considerable risk. To protect against this risk, 75% of the ROBO Global Robotics & Automation Index is invested in mid-cap and small-cap names which are not widely owned and can further reduce risk. In a quickly evolving market, often bigger is not better. From end-to-end, the ROBO Global Robotics & Automation Index is designed to provide a consistently smooth ride and help your clients relax a little—even if (and when!) the market decides it's time for a U-turn.

About the ROBO Global Robotics & Automation Index

The strength of the ROBO Global Robotics & Automation Index is rooted in the team that lies behind it. The first benchmark index to track the global robotics and automation market, ROBO Global was created by a highly experienced investment team and is supported by dedicated advisors that are much more than names added to a roster. These industry thought leaders and entrepreneurs—including five PhDs who have helped define the industry—together boast 100+ years of experience in identifying cutting-edge technologies and trends in RAAI. The results speak for themselves: As of August 15, 2017, the ROBO Global Robotics & Automation Index is up 26% year-to-date, largely outpacing the MSCI All-Country World Index (+12%), the S&P 500 (+10%) and the Nasdaq (+18%).

To learn more about the growth of the industry and its impact on ROBO Global’s Q2 results, see Earnings growth? Look no further than robotics automation.


Contributed by Chris Buck, Head of Sales & Capital Markets

The ROBO Global® Robotics and Automation Index and the ROBO Global® Robotics and Automation UCITS Index (the “Indices”) are the property of ROBO who have contracted with Solactive AG to calculate and maintain the Indices. Past performance of an index is not a guarantee of future results. It is not intended that anything stated above should be construed as an offer or invitation to buy or sell any investment in any Investment Fund or other investment vehicle referred to in this website, or for potential investors to engage in any investment activity.    

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