Last year, the coronavirus pandemic delivered severe repercussions for myriad industries and sectors, but from that scenario emerged an obvious trend: Disruptive technologies and the companies behind them weren't really, well, disrupted.
Put robotics in the conversation among disruptive technologies that are navigating the pandemic with aplomb. The investment concept is gaining traction as a post-pandemic idea, but with vaccination rates still – hopefully a temporary phenomenon – and case counts rising, waiting for the end of the virus to embrace ideas such as the Global X Robotics & Artificial Intelligence ETF (BOTZ) may amount to waiting too long.
After all, BOTZ returned 51.9 percent last year, beating the Russell 1000 Index by a margin of nearly 2.5-to-1. The $2.39 billion BOTZ, which is one of the kings of this still nascent category of exchange traded funds, is already up 3.1 percent to start 2021 after hitting an all-time high on Thursday.
That's more than adequate confirmation that waiting on Covid-19 to officially be a thing of the past to bet on BOTZ may not be a favorable strategy. Moreover, the case for BOTZ is backed by sound fundamentals, which persist with or without the pandemic in place.
BOTZ Beautiful Near-, Long-Term Prospects
As is the case with so many thematic investments, including e-commerce, fintech and telemedicine, robotics was thriving before the pandemic, but it's resilience was put on full display when Covid-19 came calling.
In fact, e-commerce's ascent is a catalyst for BOTZ because it creates demand for industrial robots – the kind that are found in Amazon (AMZN) fulfillment centers and warehouses, as just one example. Last year, the number of industrial robots in service increased by nearly 40,000 to 114,000 and the figure is forecast to more than double by 2023 with a big assist from online retail demand. While that may be the kind of robot many investors are familiar, there's much more depth to BOTZ than being a basket of companies dependent on revenue from Amazon.
“Yet robotics goes beyond the industrial segment today, with penetration increasing in multiple segments,” according to Global X research. “In fact, professional service robots in areas such as logistics, cleaning, medical, inspection, maintenance, and others are expected to grow to 240,000 units by the end of 2020, up 38% from 2019.”
BOTZ, which tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index, also provides exposure to automation, non-industrial robots, and autonomous vehicle stocks in addition to industrial robotics names. That depth is important for investors because robots are becoming more present in consumer-facing industries such as bars, casinos, hotels and restaurants – a trend foisted upon operators due to the pandemic.
“Autonomous room service robots can be a cost-effective way to improve operations and offer greater customer service,” notes Global X. “Hotels can use them to deliver food, beverages, and other amenities to a guest’s door. The robots can manage elevators and hallways, while navigating crowds. In the process, the robots alleviate time-consuming tasks for workers and promote greater guest satisfaction.”
Big Healthcare Opportunity
Perhaps the most compelling frontier for some BOTZ components is healthcare. Here, there's persistent demand and favorable demographic trends that buoy the long-term outlook for BOTZ.
Adding to the allure of the healthcare robotics scenario is the multiple uses robots have in this space, including services as mundane as cleaning and disinfecting to high level surgeries.
“Research shows that robotic surgery is associated with improved clinical outcomes for patients. Lower costs, reduced postoperative recovery time, and fewer complications are just a few benefits,” according to Global X. “Recent clinical data from Michigan shows that the use of robotic surgery increased from 1.8% in 2012 to 15.1% in 2018.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Todd Shriber
Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund where he specialized in trading sector and international ETFs leading up to and during the financial crisis. He would later become the web editor at ETF Trends. Currently, he analyzes, researches and writes on ETFs for a variety of Web-based publications and financial services firms.Shriber has been quoted in the Barron's, CNBC.com and the Wall Street Journal. His work has been published on Web sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business and Nasdaq.com.
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