Penn Wealth Publishing

2020.04.05 Penn Wealth Report Vol 8 Issue 02

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14 penn wealth Report volume 8 issue 02 05 apr 2020 Penn Wealth Report Copyright 2020. All Rights Reserved. investment intelligence BOTZ is a basket of roughly 40 leading robotics and artificial intelligence companies. ETF Spotlight Global X Robotics & Artificial Intelligence ETF Akin to Internet stocks in the 90s, by the time many investors wake up to robotics, strong growth will have already occurred. The nascent field of robotics, despite what appears to be a dearth of publicly-traded companies, is already beginning to permeate a number of differ- ent sectors and industries, and not just the obvious ones such as auto manufacturing. e US Department of Defense is embracing robotic technology, from unmanned aerial vehi- cles (UAVs) made by General Atomics to bomb disposal robots made by Boston Dynamics. A com- pany called Aerovironment (AVAV) has been hard at work developing drones not only for military use, but also for parcel delivery, crop inspections, and emergency response. In healthcare, surgeons are now assisted by robotic arms like the DaVinci, made by Intuitive Surgical (ISRG). And millions of Americans now have little robotic vacuums—made by iRobot (IRBT)—trolling through their homes each day. While making a bet on any one robotics com- pany can be risky, there are now a number of ETFs dedicated to the space. Based on size, liquidity, and management, our favorite in the current crop of such funds is the Global X Robotics & Artificial Intelligence ETF (BOTZ $17). e objective of BOTZ is straightforward: identify and invest in the most viable publicly-traded com- panies in robotics and artificial intelligence, using the Indxx Global Robotics & Artificial Intelligence ematic Index as a benchmark. Fund characteristics. ere are currently around forty holdings in the fund, which operates with an unconstrained approach; in other words, it can find the best investments in the space regardless of size, geographical location, or even sector. If a company plays a supporting role for robot developers, for example, BOTZ can buy in. As of the end of March, the top five holdings within BOTZ were: • NVIDIA Corp (NVDA/semiconductors) • Keyence Corp (KYCCF/industrial sensors) • ABB Ltd (ABB/automation products) • Intuitive Surgical (ISRG/robotic surgery) • Mitsubishi Electric Corp (MIELY/electronics) Breaking the portfolio down by industry, 27% falls into industrial machinery (we are bullish on indus- trials in 2020), 15% in electronic equipment & instruments, 10% in electronic components, and 10% in healthcare equipment. Single-digit alloca- tions filter down into a plethora of other industries, such as life sciences tools & services, semiconductors, and heavy electrical equipment. In other words, a very dynamic fund, despite its focused theme. Another interesting aspect of the fund is that nearly half of the holdings are Japanese compa- nies—a geographic region we are bullish on this year. About 35% of the holdings are small- or mid-cap in size, meaning generally more risk but greater growth potential. Performance drivers. BOTZ began trading in September of 2016, immediately ran-up 85.5%, but now sits up just 15% following the mar- ket carnage. In other words, investors have another chance to jump in. Companies of all sizes are increasingly adopting automation as a routine part of their business. With the tightening tech labor market, this fund appears to be a good way for investors to take advantage of that movement, without putting their money at risk in any one player. e contents of this report reflect the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guar- antees can be made and the firm is not liable for any losses incurred by subscrib- ers. is is not a solicitation to buy. Always consult your investment professional before investing any money. BOTZ @ $17

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