In this article, we discuss the 10 best robotics ETFs. If you want to skip our discussion on the robotics industry, you can go directly to the 5 Best Robotics ETFs.
The robotics industry is currently experiencing significant transformations due to various trends, such as the integration of artificial intelligence (AI), the Internet of Things (IoT), and the emergence of autonomous and collaborative technologies. These trends are driving the alliance between AI and robotics, resulting in a powerful synergy. According to Mordor Intelligence, the size of the robotics industry stood at $114.7 billion in 2023 and is expected to grow at a CAGR of 17.6% to reach $258.4 billion by 2028. The robotics industry can be broadly divided into two categories. The first category consists of industrial robots that are used in manufacturing, assembly, packaging, inspecting, and testing across industries like automotive, electronics, metals, plastics, and chemicals. The industrial robotics segment holds a substantial share, accounting for 91% of the total robotics industry. In 2023, the industrial robotics industry was valued at approximately $104.65 billion. Over the next six years, it is predicted to expand at an average annual rate of 7.9% to reach a market size of $165.4 billion.
The second category is service robots that assist humans in non-industrial tasks, providing services in areas like logistics, domestic work, healthcare, hospitality, agriculture, defense, and space. Several factors have driven the growing demand for service robots in recent times. Increases in labor costs due to shortages, inflation, and other factors like aging populations requiring assistive robots have accelerated the adoption of service robots. Service robots have also come to the forefront in the fields of sanitation, deliveries, and telemedicine.
Investment Outlook
Currently, the top three sectors driving the adoption of robotics are the medical field, domestic services, and the entertainment industry. Together, these three industries are responsible for 58.4% of the total top line. Due to a strong demand outlook across various sectors, significant investment is being made in the robotics industry. According to the International Federation of Robotics (IFR), there has been a surge in the demand for robotics in new production facilities within the automobile industry. A significant investment of nearly $16 billion was made in the robotics industry in 2022. Furthermore, the total number of industrial and service robots stood at 4.27 million in 2022. This figure is expected to compound at an average rate of nearly 2.2% to reach 4.83 million by 2028.
Some of the best robotic stocks, such as Thermo Fisher Scientific Inc. (NYSE:TMO), Intuitive Surgical, Inc. (NASDAQ:ISRG), and UiPath Inc. (NYSE:PATH), provide investors and hedge funds with significant investment opportunities in the industry. In addition to individual stocks, Global X Artificial Intelligence & Technology ETF has remained the best-performing ETF in the last five years. Retail investors also refer to it as Vanguard Artificial Intelligence ETF or Vanguard Robotics ETF. The iShares Robotics and Artificial Intelligence ETF is also noteworthy for delivering healthy returns to investors. You can also check out the 11 Best AI ETFs to Invest In 2023 here.
We shortlisted the 10 best robotics ETFs based on their 5-year performance as of September 8, 2023. These ETFs provide exposure to companies engaged in robotics, automation, and related themes. The ETFs have been ranked in ascending order of their 5-year performance.
Total Net Assets as of September 8, 2023: $103.1 million
Expense Ratio: 0.50%
Number of Holdings: 98
ALPS Disruptive Technologies ETF (NYSEARCA:DTEC) is focused on mimicking the performance of the Indxx Disruptive Technologies Index (IDTEC), which encompasses various disruptive thematic areas, including robotics and artificial intelligence (AI). The fund was created in December 2017.
The ETF has allocated 9.2% of its holdings towards the robotics and AI theme. Some of the other themes, like 3D printing and healthcare innovation, provide indirect exposure to the robotics industry as well. Leading robotics companies like iRobot Corporation (NASDAQ:IRBT) and Intuitive Surgical, Inc. (NASDAQ:ISRG) are amongst the top 10 holdings of the ALPS Disruptive Technologies ETF (NYSEARCA:DTEC).
Here's what RiverPark Advisors said about Intuitive Surgical, Inc. (NASDAQ:ISRG) in its Q1 2023 investor letter:
“Intuitive Surgical, Inc. (NASDAQ:ISRG): ISRG shares were a top detractor in the quarter despite 4Q results largely in line with expectations. The company used the quarterly release to define the timeline of upcoming products including its next-gen platform, now expected next year. The market was disappointed by this timing.
9. Robo Global Robotics and Automation Index ETF (NYSEARCA:ROBO)
5-Year Performance as of September 8, 2023: 29.4%
Total Net Assets as of September 8, 2023: $1.39 billion
Expense Ratio: 0.95%
Number of Holdings: 78
Robo Global Robotics and Automation Index ETF (NYSEARCA:ROBO) seeks to duplicate the performance of the ROBO Global Robotics and Automation Index. The index is designed to measure the performance of companies engaged in automation and robotics-related services.
The ETF has a global scope, which includes emerging markets as well. Robo Global Robotics and Automation Index ETF (NYSEARCA:ROBO) came into being in October 2013. The ETF invests in 12 industries, namely manufacturing & industrial automation, logistics automation, food & agriculture automation, surveillance & security, energy, healthcare, consumer products, retail, aerospace & defense, 3D printing, computing, AI & processing.
8. iShares Robotics and Artificial Intelligence Multisector ETF (NYSEARCA:IRBO)
5-Year Performance as of September 8, 2023: 29.6%
Total Net Assets as of September 8, 2023: $484.06 million
Expense Ratio: 0.47%
Number of Holdings: 113
iShares Robotics and Artificial Intelligence Multisector ETF (NYSEARCA:IRBO) is an equal-weighted ETF that was created in June 2018. Its primary objective is to replicate the performance of the NYSE FactSet Global Robotics and Artificial Intelligence Index.
iShares Robotics and Artificial Intelligence Multisector ETF (NYSEARCA:IRBO) offers exposure to companies in various sectors that are actively involved in robotics and AI, including industrials, information technology, consumer discretionary, healthcare, materials, and financials. These companies operate within both developed and emerging markets. The ETF provides 54%, 12.1%, and 10.4% geographic exposure to the US, China, and Japan, respectively. Faraday Technology Corporation (3035.TW) holds the highest weight in the ETF, accounting for 1.79% of the portfolio.
7. First Trust NASDAQ Artificial Intelligence and Robotics ETF (NYSEARCA:ROBT)
5-Year Performance as of September 8, 2023: 35.6%
Total Net Assets as of September 8, 2023: $427.7 million
Expense Ratio: 0.65%
Number of Holdings: 106
First Trust NASDAQ Artificial Intelligence and Robotics ETF (NYSEARCA:ROBT) invests in companies that are engaged in AI, robotics, and automation-related themes globally. The ETF is at seventh place on our list of the best robotics ETFs.
First Trust NASDAQ Artificial Intelligence and Robotics ETF (NYSEARCA:ROBT) utilizes a modified equal-dollar weighting methodology for constituent stocks and rebalances quarterly and reconstitutes semi-annually. The ETF aims to provide targeted exposure to “pure-play” AI and robotics companies. Among its holdings, the three largest constituents are Appian Corporation (NASDAQ:APPN), Gentex Corporation (NASDAQ:GNTX), and AeroVironment, Inc. (NASDAQ:AVAV), collectively representing 7.3% of the portfolio, with nearly equal weights assigned to each. The ETF only invests in corporations that are either enabling, engaging, or enhancing the use of AI and robotics, according to the Consumer Technology Association (CTA).
6. Robo Global Artificial Intelligence ETF (NYSEARCA:THNQ)
5-Year Performance as of September 8, 2023: 36.5%
Total Net Assets as of September 8, 2023: $78.2 million
Expense Ratio: 0.68%
Number of Holdings: 66
Robo Global Artificial Intelligence ETF (NYSEARCA:THNQ) seeks to replicate the performance of the ROBO Global Artificial Intelligence Index, which comprises companies engaged in artificial intelligence, robotics, and automation globally. The fund caps individual constituent weights at 5% of assets.
The ETF provides investors the opportunity to gain targeted exposure to the robotics industry and also benefit from other high-growth AI segments like natural language processing and machine learning. As of September 8, Cognex Corporation (NASDAQ:CGNX) and Teradyne, Inc. (NASDAQ:TER) are two of the most prominent robotics companies in the ETF’s portfolio.
Here’s what RGA Investment Advisors said about Cognex Corporation (NASDAQ:CGNX) in its Q4 2022 investor letter:
“This question as to whether anything has structurally changed is as applicable to e-commerce as it is to 2022’s most talked about economic datapoint: the CPI. Before the pandemic, people would speak about “secular stagnation” and the strong disinflationary forces that kept the economy from experiencing a robust post-Great Financial Crisis recovery. Today, we are far more likely to hear about stagflation than “secular stagnation”, yet the economy is growing faster today than it was in the past. We must therefore ask ourselves, what are the biggest changes from before the pandemic to now that would change our economic outlook from disinflation to inflation. The largest change is what people now call “The Great Resignation” whereby Boomers who entered the workforce in the 1970s finally retiring en masse.[3] This can have consequences for wages, though we would caution against fearing a wage price spiral as underinvestment in efficiency due to an overabundance of labor during the past decade can finally commence with lower levels of fear for labor unions and politicians alike. In fact, investments in productivity might even be encouraged now with fears of inflation front-and-center. As we have pointed out several times in the past, Cognex Corporation (NASDAQ:CGNX) stands to benefit considerably from this change.”
In addition to Robo Global Artificial Intelligence ETF (NYSEARCA:THNQ), individual stocks such as Thermo Fisher Scientific Inc. (NYSE:TMO), Intuitive Surgical, Inc. (NASDAQ:ISRG), and UiPath Inc. (NYSE:PATH) are among the best robotics stocks.
