Bill Studebaker, ROBO Global President and CIO joins the On the Move panel to discuss the ROBO ETF and the role that robotics and artificial intelligence play in the healthcare industry.
JULIE HYMAN: Well, investors are looking for a lot of different ways to play some of the emerging technologies right now, particularly within health care as well. Bill Studebaker is with us right now. He's the ROBO Global president and CIO. He's joining us from San Francisco. And he's got an ETF in their portfolio that is called HTEC that looks at some of these health-care innovation plays.
So, Bill, you were talking to me about how this started a little more than a year ago. I imagine it has gained some steam in the past six months or so. Why did you sort of pinpoint this as an area to focus on, as an area for an ETF to be focused on?
BILL STUDEBAKER: Well, we think health-care innovation is just what the doctor ordered. And I think this pandemic has certainly helped heighten some of the sensitivities around the problems in health care today. We don't have health care. We have sick care. 20% of our GDP is spent on health care. It's unsustainable. Globally it's close to $9 trillion.
So, as we were thinking about health care, we wanted to invest in the future of it. We knew that years ago we had sort of strong analysis and belief seeing that this was one of the least digitized areas of the economy. And there wasn't an area of health care that wasn't going to benefit through innovation.
So as we kind of looked at it, we see four themes that are kind of taking place right now which we're taking advantage of, which is for going for an industry that's been analog to digital. We're focusing not on sick care but prediction/prevention. We're going from sort of, you know, a shortage of skilled workers to AI helping support, you know, doctors and decision making, and really a model that's going from centralization to decentralization.
- Bill, I'm looking at your holdings for your artificial intelligence ETF, and some interesting names in there, particularly Tencent and Baidu. You know, so much of the discussion on AI is often framed in the context of the US versus China, and I'm curious where you see the real growth potential when it comes to a company like Baidu or Tencent.
BILL STUDEBAKER: Well, that's a good question, and a pretty open-ended one. I mean, I don't think there is a company or a country that's not going to benefit by adding AI to help do what. Really it's about automating. It's about optimizing. It's about improving cost and efficiency, and really in growth.
So right now the sort of two titans are clearly in the US and in China, but AI is beginning to get infiltrated across, you know, all parts of economy and all over the world. So I don't think this is just a zero-sum game. I think the pie is going to get, you know, really big.
In the US alone, Bank of America put a study out talking about AI. It's essentially going to go up fourfold over the next four years, four to five years. So I think that right now people are beginning to have a little bit more belief and appreciation for how fast the disruptions are happening. And robotics and AI are allowing this to really accelerate.
ADAM SHAPIRO: I am curious as you dive deep into the index. You talk about these different subsectors like medical instruments and diagnostics, and when I saw that, I was thinking, well Johnson & Johnson has real difficulty with its medical devices. But as the index grows, I imagine within it these subsections are going to grow at different paces. Can you-- an investor who's looking one or two years out, are there any within the subsectors that you think are poised for the greatest growth right now?
BILL STUDEBAKER: Well, I mean I think that's why we created the index so it allows you to capture the growth in a diversified fashion. I mean, it's hard to know exactly when the green light is going to go on in a certain area. I think the-- there is going to be a lot of upside in areas like regenerative medicine, in genomics, in preventative medicine. We're seeing in data analytics. I really, you know, don't want to isolate a particular sector because it's really hard to know.
What we do is we invest across the value chain in best-of-breed companies. And we're looking for companies that have high-revenue purity as it relates to one of those eight subsectors that you've identified. And then we're looking for companies with strong market-share leadership, with investment leadership, and so there's a lot of fundamental insight that goes in to that-- and no, sorry-- and technological leadership. So those are all really important.
JULIE HYMAN: Bill, the ETF industry is very, very crowded right now, you know, and you do have competitors for some of these ETFs, or at least some overlap with other products that are out there. So how do you-- how do you sort of get a competitive edge in what has become a very noisy industry over the past several years?
BILL STUDEBAKER: Well, that's a good question too. Listen, we're a team that's focused on one thing, one thing only-- robotics automation, AI, and health-care innovation. And we have a team of financial experts. We also have a team of industry experts. We have seven PhDs on our team that really are kind of a who's who in robotics, AI, and health-care innovation-- a lot of exposures that are out there. Our market-cap-weighted people put something together-- looks and smells like a theme, but when you really dig into it doesn't always necessarily capture it particularly well.
We essentially revenue weight our indices, and again, we focus very acutely on the revenues, having purity there, and also again, really understanding the investment that the companies are making, you know, and understanding their technology and how defensible it is and how scalable it is.
JULIE HYMAN: Revenue-weighted-- that's an interesting differentiator certainly. Bill Studebaker, thanks for your time. ROBO Global president and CIO, good to see you.