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Guide to Investing in Robotics Stocks: What's the Future in Automation?

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  • (0:45) - Has Robotics Reached a Critical Mass?

  • (1:50) - Key Growth Areas in Robotics Industry

  • (4:50) - Rising Wages Accelerating Robotics and Robots Being Taxed

  • (7:00) – Robotics Index Overview

  • (12:00) - How Does the Index Choose Holdings?

  • (16:00) - How Does the Index Decide to Drop Holdings?

  • (18:35) - Where Should You Focus in the Robotic Industry?

  • (21:00) - Episode Roundup: Podcast@Zacks.com

When people think of future technologies that will change our lives, robotics and the general trend towards more automation is usually at the top of the list. And while some of the more sci-fi aspects of this technology still appears to be in the future, robotics and automation is already an important industry, and one that could surge in status in the years ahead as well.

The space is probably a lot bigger than you think too. Sure, most are familiar with companies like iRobot (IRBT), but the industry goes beyond vacuuming and pool cleaning robots at this point. In fact, many big-name players are getting into the robotics world, and it looks to be a high growth area for quite some time.

To learn more about this growing trend, I spoke with Bill Studebaker, the CIO and President of Robo Global. This company was the first to create a benchmark index to track the global robotics and automation market, acting as a barometer for companies across the space, and making Robo Global a firm in the know about the world of robotics and automation.

Investing in Robotics

Bill and I discuss the key growth areas of the robotics and automation world, as well as some of the top reasons for the greater push towards robotics as of late, including the prospect of rising wages. We also talk about how this industry may have reached a ‘critical mass’ in recent years, and what this means for investors too.

We also look at what the hot areas of the robotics world are, and I get Studebaker’s take on Bill Gates’ recent commentary that we may have to consider taxing robots in the near future. We then investigate what is ahead for this industry, and why an index-based approach might make sense in this high-growth and higher-risk corner of the market.

Index in Focus

The index is also the basis for the Robo Global Robotics & Automation Index ETF (ROBO), the most popular fund—by assets—to track the space in the ETF world. We dive into the underlying benchmark in this podcast and I investigate how securities are chosen and weighted for the index.

This is especially important when you take a first glance at the index components for the benchmark, as some companies that make their way into the benchmark include large and well-known firms like Deere (DE) and Northrop Grumman (NOC) to name a few. We go over why these are in the index, as well as the wisdom behind including a number of semiconductor stocks such as Nvidia (NVDA), Qualcomm (QCOM), and Ambarella (AMBA) too.

We also talk about the significant foreign exposure in this index, and why Japanese companies account for such a large portion of the benchmark as well. Finally, we talk about the market cap breakdown for companies in this space, and what could be ahead for this growing area.

If you’ve been interested in the world of robotics and how to invest in this space, definitely check out this podcast for a great guide to the industry!

Bottom Line

But what do you think about the world of robotics? Is this something you’ve considered for your portfolio? Make sure to write us in at podcast @ zacks.com or find me on Twitter @EricDutram to give us your thoughts on this, or anything else in the fund market.

But for more news and discussion regarding the world of investing, make sure to be on the lookout for the next edition of the Dutram Report (each and every Thursday!) and check out the many other great Zacks podcasts as well!

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