The International X Robotics & Synthetic Intelligence Thematic ETF (NASDAQ:BOTZ) offers publicity to corporations which are concerned in industrial robotics and automation, non-industrial robotics, and autonomous automobiles.
The fund was created in 2016 and has a complete expense ratio of 0.68% (4th most cost-effective amongst related ETFs). Knowledge Tree and iShares present related choices within the robotics and AI area with cheaper expense ratios.
The fund has returned 3.84% every year since inception, with an index monitoring error of 0.44%. BOTZ is down greater than 50% this yr, affected by sharp drawdowns in 2022 owing to rising charges and beforehand excessive valuations.
Nevertheless, the sharp decline presents traders the chance to construct long-term publicity within the robotics and AI thematic.
The fund’s efficiency will be seen beneath:
The fund is closely weighted in direction of america and Japan, which characterize 78.9% of the portfolio exposures.
Alternatively, the fund has no publicity to China, which has been the world’s largest industrial robotic market since 2013 and accounted for 44% of whole robotic installations in 2020.
On the similar time, the shortage of China publicity hedges the fund in opposition to the extraordinary know-how conflict between the U.S and China.
The elevated polarization between these two international locations has created critical geo-political dangers, which might considerably influence the fund.
For these , I lately wrote an article that covers the geo-political dangers between the U.S and China in additional element.
The fund’s nation breakdown will be seen beneath:
International labor shortages driving automation
International labor shortages have gotten an financial problem for a lot of developed and creating economies.
In accordance with Korn Ferry, we will count on a expertise deficit of 85.2 million employees throughout world economies by 2030.
The worldwide labor scarcity interprets into $8.4 trillion of unrealized annual revenues – equal to the mixed GDP of Germany and Japan.
The maps beneath present the full world expertise deficit by financial system for 2020 and 2030:
The USA is anticipated to have a big deficit of employees by 2030, whereas Japan is forecasted to have an acute deficit of employees.
These labor deficits will intensify the necessity for robotics and automation in these international locations, which will probably be useful for the fund.
India is the one nation analyzed that may count on a expertise surplus, pushed by a rising working-age inhabitants.
A number of catalysts for the robotics market
In accordance with Citi, the worldwide industrial robotics market is anticipated to double in measurement from 2021 to 2028 reaching $165.3bn in market measurement.
There are a number of catalysts behind the rising robotics market, together with:
- International labor shortages: The worldwide scarcity of employees will probably be a key driving power behind the adoption of robotics and synthetic intelligence as mentioned above.
- Geo-political dangers between the U.S and China: A higher separation between the U.S and China is encouraging the onshoring of U.S manufacturing exercise. Robots are the one resolution to reduce the prices of relocating manufacturing services from a low-wage to a high-wage nation.
- Wage inflation: The upward strain on wages from excessive inflation will encourage the development in direction of automation. Corporations will probably be eager on integrating robotics into their enterprise to cut back prices and to enhance productiveness.
- COVID-19 pandemic: The pandemic has highlighted the overdependence of provide chains on human labor. The pandemic has triggered a worldwide transformation of provide chains to keep away from future disruptions from pandemics or different world crises.
The BOTZ fund is ideally positioned to profit from the rising adoption of robotics and automation because of a mix of financial challenges equivalent to world labor shortages, geo-political dangers, wage inflation, and provide chain dangers.
The sharp decline within the BOTZ fund presents traders the chance to construct long-term publicity within the robotics and AI thematic.
I say BUY.