Robots are All Around Us

12/26/2017 5:00 am EST

Focus: INDUSTRIALS

Tony Daltorio

Editor, Investors Alley Premium Digest

At one time, the only robots you and I would come in contact with was in a movie like Star Wars. But no longer; the age of robots is upon us. They are in our homes, in our workplace, and all around us the form of drones, driverless cars, etc., notes Tony Daltorio, editor of Investors Alley The Market Cap.

Many of us in the not too distant future will be working alongside a robot, whether it’s a real metallic one or a virtual one (AI bots). The term given to these type of robots is collaborative robots or cobots. I find them the most intriguing from an investment viewpoint because they are a disruptive technology.

Although there is no pure play cobots firm, Universal Robotics is intriguing. It is a Danish robotics firm that was purchased by Teradyne (TER) in 2015 for $285 million and is considered to be the market leader in cobots.

It was the first mover in the cobot space, launching the first cobots about 10 years ago and has now sold over 10,000 units that are used in industries ranging from automotive to electronics to pharmaceuticals to metals.

The parent company, Teradyne, though is mainly a supplier of automation equipment for test (largely semiconductors) and industrial applications. That’s another great business at the moment. As such, Teradyne is semiconductor-related investment with a robotics growth kicker.

For a pure play on robotics, there are two ETFs that fit the bill. They are the Robo Global Robotics & Automation ETF (ROBO) and the Global X Robotics & Artificial Intelligence ETF (BOTZ).

Both are good choices with all of the leading companies in the broad robotics field globally. This is important to you since many of the leading robotics firms are in Japan and would otherwise be largely unavailable to U.S. investors.

But there are differences in their respective portfolios. One main difference between the two ETFs is that BOTZ is more concentrated. Its top position is Japan’s Yaskawa Electric (YASKY), making up 8.1% of the portfolio. The top position at ROBO is also Japan’s Yaskawa Electric, but it makes up only 2.25% of the portfolio.

Another important difference is that BOTZ has more overseas exposure, with North America accounting for only roughly 27% of the portfolio.

In contrast, ROBO has about 40% in North American companies. BOTZ has more than 45% of its portfolio in Japan while ROBO has only 30% in Japan. I believe robotics is and will continue to be one of the best exponential growth industries you can invest in.

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