Robotics and automation: we’re just getting started

From

Kanish Chugh

The investment case for robotics, automation and artificial intelligence is much more diverse than most investors realise and is still in the early stages of what will prove to be a long-term trend, says one of the most experienced researchers in the field, Jeremie Capron, Director of Research at index developer and research company ROBO Global.

Speaking at a recent ETF Securities webinar, Capron said: “Robotics is not a niche. It is a set of general-purpose technologies that can be applied to every market, every industry, very much like the internet over the past 20 years.

“We think we are in the early stages of a technology shift that offers tremendous investment opportunities.”

In fact, he believes the biggest problem investors have choosing stocks in the sector is understanding its diversity and staying on top of developments. The case for using a managed fund, such as an ETF, to gain exposure to the sector is strong.

ROBO Global launched its Robotics and Automation Index in 2013.

Australian investors can gain exposure to the Index through ETF Securities’ ETFS ROBO Global Robotics and Automation ETF (ASX: ROBO). Since inception in September 2017, the fund has produced an average annual return of 17.2%

Top holdings in the portfolio include Hexagon AB, a Swedish company whose sensors are used as components in robot navigation systems, and Kohyoung Technology, a Korean computer maker that specialises in detecting defects in manufacturing processes.

ETF Securities Head of Distribution Kanish Chugh says: “The world is entering one of the most transformational periods in robotics, automation and artificial intelligence. Robotics is no longer a niche theme but rather a foundational technology that will soon be applied to virtually all industries and markets.

“The investment opportunity here is significant and if captured correctly the growth prospects from companies within the industry is huge. We believe it is important for investors to ensure their portfolios have early exposure to this theme.”

Capron lists some of the recent developments in the sector:

  • Advances in sensing combined with precision technology has opened up the field of robotic surgery. In the near future, AI will be deployed to enhance diagnostics and analyse patient data and clinical trial data.
  • The technology infrastructure system, 5G wireless, is leading to a number of “smart city” developments, such as cloud-based traffic control.
  • In agriculture and food production, facial recognition systems are being tailored to analyse plants for their level of hydration and their need for fertiliser and pesticides.
  • More advanced cleaning robots are playing an important role in supporting the aged.
  • In the energy industry, robots have been developed to inspect and maintain power lines.

What makes these developments important from an investor point of view is that robotics, automation and artificial intelligence are being used across a wider range of industry sectors, offering a greater diversity of investment cases.

Capron says: “Over the past decade performance capabilities have reached a high level and the costs are coming down, so we’re seeing an explosion in the range of potential applications.

“We have the data centres that can process enormous amounts of data in milliseconds, and we have the communications networks that can deliver intelligence to machines wherever we need them.”

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