Companies are selected from 22 different FactSet Revere Business Industry Classification System subindustries that offer exposure to robotics and AI, and must derive at least half of their revenue from robotics or AI, hold a 20% market share or have $1 billion in revenue from one of those subindustries.
RBOT has perhaps the most complicated methodology. Like IRBO, it focuses on both AI and robotics at the global level. Its methodology classifies companies as enablers, engagers or enhancers, with each group receiving a specific fixed weighting at each rebalancing, with companies equally weighted in the three categories. Each category includes 30 companies.
Holdings
The holdings of the four ETFs are very different, with little overlap in their top 10 components, except for ROBO and BOTZ: Both of those ETFs hold OMRON Corp., Keyence Corp., FANUC Corp., and NVIDIA Corp. in common, though at very different weights.
Perhaps more importantly, each of the four ETFs have the same top three sectors: industrials, technology and health care. ROBO and BOTZ, for example, have industrials as their largest sector, weighting it at roughly 55% and 69%, respectively. Meanwhile, ROBT’s and IRBO’s largest sector is technology, with respective weights of roughly 56% and 67%.
And each fund has the U.S. and Japan as their top two countries by weighting. BOTZ is the only fund in the group weighting Japan as its largest country, at roughly half of the index, with the U.S. at less than 30%. BOTZ is also the only fund in the group that doesn’t include emerging market securities in its selection universe. That means countries like Taiwan and China have no influence in the index, while the other three funds include at least one of those countries in their top 10 countries.
Trading & Performance
The most liquid of the funds is BOTZ, with a spread of 0.05% and an average daily dollar volume of $15.3 million. IRBO, the newest fund, is also the smallest and least liquid, with a spread of 0.21% and an average daily dollar volume of $0.5 million.
However, ROBO, despite reasonable liquidity, has been having a rough year in 2019. It’s the only fund in the group to see outflows, and is the worst year-to-date performer. It had lost $71 million to outflows as of late May, and was trailing the other funds in the group, with an increase of just 12.35%.
Meanwhile, ROBT, despite being the second least liquid fund in the category, was up more than 22%, leading the group, and had received the most year-to-date inflows, at $21.3 million. It was also the best performer during the 12-month period, up more than 5%, while BOTZ was the worst performer, with a decline of 17%.
Final Thoughts
While ROBO is the most established fund in the space, it has been ceding ground to one of its competitors. And that competitor is not BOTZ, its neck-and-neck rival for so long in terms of assets, but the relative newcomer ROBT.
ROBT remains small, at less than $50 million in AUM, and a bit less liquid than the larger funds in the space, but between its strong performance over the last 12 months and its inflows versus ROBO’s outflows year to date, its star is clearly rising.
