Technology

The Top 6 ETFs for Robotics, Automation and Artificial Intelligence Have Vast Style Differences

First Trust Nasdaq Artificial Intelligence and Robotics ETF (NASDAQ: ROBT) was originated in February 2018, and it aims to track the Nasdaq CTA Artificial Intelligence and Robotics Index. This ETF was designed to track the performance of companies engaged in the AI and robotics segments of the technology, industrial and other economic sectors.

It was last seen to have $39.7 million in assets under management. The overall expense ratio was 0.65%, and it was last seen trading up 29% so far in 2019. The ETF has a total of 95 holdings, and it has a rather different scale of companies in its top holdings than its peers. The top 10 holdings were last seen as follows:

  • BlackBerry (2.16%)
  • PKSHA Technology (2.12%)
  • Synopsys (2.10%)
  • Blue Prism (2.08%)
  • Cadence Design Systems (2.06%)
  • Ambarella (1.99%)
  • OBIC (1.96%)
  • Aveva (1.95%)
  • Nice (1.93%)
  • Ansys (1.91%)

Robo Global Robotics and Automation Index ETF (NYSEARCA: ROBO) has been around since late in 2013, and it seeks to track investment results that correspond generally to the price and yield performance of the ROBO Global Robotics and Automation Index.

It was last seen up over 28% so far in 2019 and was shown to have $1.47 billion in assets under management. It also has an expense ratio of 0.95%. This fund also has many companies based in and listed in Japan and elsewhere in Asia, many of which may be unheard of by most Americans. It most recently had 41 holdings, and the top 10 were last shown as follows:

  • Daifuku (2.03%)
  • Yaskawa Electric (2.01%)
  • SMC (1.97%)
  • Harmonic Drive Systems (1.95%)
  • Nvidia (1.87%)
  • Fanuc (1.86%)
  • Zebra Technologies (1.81%)
  • Omron (1.79%)
  • Nabtesco (1.79%)
  • Krones (1.78%)

Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares (NYSEARCA: UBOT) uses leverage for intra-day tracking moves, and it was last seen up by about 107% so far in 2019 alone. The ETF seeks 300% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index, so it would in theory aim to have more or less the same holdings as the Global X Robotics & Artificial Intelligence ETF above.

The problem with leveraged funds of any sort, let alone three times, is that orders coming in and out can drastically alter the holdings on any given day. All leveraged ETFs tend to come with additional warnings of tracking errors, potential price decay and other special factors that are different than traditional ETFs.

This fund’s massive performance has not been hampered with a high expense ratio of 1.49%, and its assets under management of a mere $28 million may not reflect the true holdings at any point of a trading day, due to popularity of the leveraged ETFs varying greatly over time.

As you can see, there is no “one-size fits all” coverage universe for ETFs that want to profit from the explosive growth around the fields of robotics, AI and machine learning. Some sound almost identical, but the top holdings and the weightings of each inside the ETF have turned out to be entirely different. And this is also one of those instances in which an ETF’s expense ratio seems to have little correlation to relative performance so far in 2019.

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