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

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

Written by: Chris Buck

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 its 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.

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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ROBO Global LLC is the creator of the ROBO Global® Robotics and Automation Index series, which provides comprehensive, transparent and diversified benchmarks representing the ... Click for full bio

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

Written by: Jeremie Capron

China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.


For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.

You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.

Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.

As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.

Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.

To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.

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

Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.

Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.

Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.

Want all the details? Download the ROBO Global Investment Report - Summer Brings Best ROBO Earnings in Six Years or visit us here.

ROBO Global
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ROBO Global LLC is the creator of the ROBO Global® Robotics and Automation Index series, which provides comprehensive, transparent and diversified benchmarks representing the ... Click for full bio