ETC Plans ROBO, A Global Robotics ETF

August 07, 2013

It had to happen: An ETF focused on robotics goes into registration.

Exchange Traded Concepts (ETC), the Okla.-based firm that recently made moves to bring a tactical equities ETF to market, filed regulatory paperwork detailing another interesting innovation: a fund targeting the growing global robotics industry that it will trade under the catchy symbol “ROBO.”

The Robo-Stox Global Robotics and Automation Index ETF (Nasdaq: ROBO) is a global play on the robotics and automation industry, and will invest passively in the Robo-Stox Global Robotics and Automation Index, the filing said. The index holds companies whose main business is the technologies, services or devices that contribute to any type of robot, robotic action or automation system.

This futuristic strategy computes well as the next niche fund to join ETC’s other specialized strategies currently on the market, and takes a slice from the global technology segment of the equity market that hasn’t yet been chomped on.

ROBO is vaguely comparable to the $11 billion Technology Select Sector SPDR Fund (NYSEArca: XLK) and the $550 million iShares Global Tech ETF (NYSEArca: IXN). But ROBO competes with XLK and IXN on a very relative level.

Also, ROBO’s ultra-specialized strategy contributes to its high cost of 95 basis points, or $95 for each $10,000 invested. By comparison, IXN costs 48 basis points and XLK costs 18 basis points.

ROBO will hold highly liquid companies with a market cap greater than $200 million.

The constituents will be a 40/60 balance between “bellwether” and “non-bellwether” stocks, with bellwether stocks being those that the index provider deems indicative of overall performance within the robotics and automation sector, and non-bellwether stocks representing stocks that the index provider believes will drive revenue due to a specialized or unique contribution to the sector.

At the discretion of the advisor, ROBO may invest 20 percent in nonrobotic or automation-related constituents, such as cash or money market funds.

ETC will be the fund’s advisor, and Index Management Solutions will act as subadvisor.

 

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