By Philip van Doorn
Investors looking for the best stock-market performance have been well-served for many years by focusing on companies using new technology to increase their sales quickly and steadily. The performance of the S&P 500 index has borne this out.
Below is a screen of 24 stocks held among five exchange-traded funds that focus on companies involved with robotics and automation — booming technology for companies involved in many industries around the world.
For robotics and automation, here are five ETFs that take different approaches to playing innovation:
The ARK Autonomous Technology & Robotics ETF /zigman2/quotes/201937883/composite ARKQ -2.55% is actively managed and holds 46 stocks of companies involved with automation, robotics, autonomous vehicles, energy storage, 3-D printing and space exploration. It is highly concentrated; Tesla Inc. /zigman2/quotes/203558040/lastsale TSLA -6.32% , its largest holding, is 11.9% of the portfolio.
The Global X Robotics & Artificial Intelligence ETF /zigman2/quotes/205896633/composite BOTZ -1.35% holds just 36 stocks. It tracks a global index of companies listed in developed markets. The companies are expected to benefit from the increased utilization of robotics and artificial intelligence. The largest holding is Intuitive Surgical Inc. /zigman2/quotes/204935713/composite ISRG -2.03% , at 8.8% of the portfolio.
The Robo Global Robotics & Automation Index ETF /zigman2/quotes/204801386/composite ROBO -1.21% tracks a global index of companies involved in robotics, automation and AI and is rebalanced quarterly. The fund follows a tiered weighting strategy; the largest holding — Intuitive Surgical — is 1.8% of the portfolio of 84 stocks. It is the oldest of the five ETFs listed here, established in October 2013.
The iShares Robotics and Artificial Intelligence Multisector ETF /zigman2/quotes/209093426/composite IRBO -2.16% tracks an equal-weighed global index of companies involved with robotics and AI. It holds 120 stocks. The index is reconstituted annually and rebalanced twice a year.
The First Trust Nasdaq Artificial Intelligence & Robotics ETF /zigman2/quotes/203093692/composite ROBT -1.95% tracks the Nasdaq CTA Artificial Intelligence and Robotics Index, which ranks companies so that the portfolio is 60% weighted to “engagers,” 25% “enablers” and 15% “enhancers.” It holds 108 stocks.
Here’s some more information about the ETFs:
|ETF||Established||Assets ($mil)||Stocks held||Concentration in five largest holdings||Expense ratio|
|ARK Autonomous Technology & Robotics ETF /zigman2/quotes/201937883/composite ARKQ||9/30/2014||$2,761||46||38%||0.75%|
|Global X Robotics & Artificial Intelligence ETF /zigman2/quotes/205896633/composite BOTZ||9/12/2016||$2,650||36||42%||0.68%|
|Robo Global Robotics & Automation Index ETF||10/21/2013||$1,857||84||10%||0.95%|
|iShares Robotics and Artificial Intelligence Multisector ETF /zigman2/quotes/209093426/composite IRBO||6/26/2018||$440||120||6%||0.47%|
|First Trust Nasdaq Artificial Intelligence & Robotics ETF /zigman2/quotes/203093692/composite ROBT||2/21/2018||$262||108||13%||0.65%|
|Sources: ETF managers, FactSet|
Here’s a summary of total returns for the ETFs against the SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY -1.25% and the Invesco QQQ Trust /zigman2/quotes/208575548/composite QQQ -2.02% , which tracks the Nasdaq-100 Index /zigman2/quotes/210598364/realtime NDX -2.09% :
|ETF||2021||2020||Three years||Five years||Seven years|
|ARK Autonomous Technology & Robotics ETF /zigman2/quotes/201937883/composite ARKQ||10%||107%||135%||320%||N/A|
|Global X Robotics & Artificial Intelligence ETF /zigman2/quotes/205896633/composite BOTZ||11%||52%||64%||N/A||N/A|
|Robo Global Robotics & Automation Index ETF /zigman2/quotes/204801386/composite ROBO||11%||45%||59%||153%||151%|
|iShares Robotics and Artificial Intelligence Multisector ETF /zigman2/quotes/209093426/composite IRBO||12%||49%||79%||N/A||N/A|
|First Trust Nasdaq Artificial Intelligence & Robotics ETF /zigman2/quotes/203093692/composite ROBT||12%||46%||73%||N/A||N/A|
|SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY||22%||18%||64%||128%||157%|
|Invesco QQQ Trust /zigman2/quotes/208575548/composite QQQ||21%||49%||108%||240%||305%|
All five of the automation and robotics ETFs have trailed the broad market this year. During 2020, ARKQ was a stellar performer in part because of its big bet on Tesla, which skyrocketed 743% for the year. ROBO has outperformed SPY for five years but underperformed QQQ for all periods.
A stock screen from five automation and robotics ETFs
The five ETFs together hold 251 stocks across 21 countries. Only two stocks — Intuitive Surgical and Nvidia — are held by all five. Only BOTZ doesn’t own stocks in companies based in China.
China may be a special area of risk for years to come. There’s no way of knowing how much change will be brought about by China’s regulatory crackdown affecting tech-related industries. Meanwhile, U.S. regulators’ actions as well as the conflict between U.S. and Chinese regulators over the availability of audit reports may affect investors holding shares of Chinese companies listed in the U.S.
Yet, as you will see, three Chinese tech giants held by some of these ETFs are highly regarded by Wall Street analysts.