Lyxor launches ‘Rise of the Robots’ ETF

Sep 21st, 2018 | By | Category: Equities

Lyxor has announced the launch of the Lyxor Robotics & AI UCITS ETF, offering exposure to firms that stand to benefit from the growth of the robotics, automation and artificial intelligence (AI) industries.

Lyxor launches robotics and AI ETF

The Lyxor Robotics & AI UCITS ETF provides exposure to firms poised to benefit from future developments in the themes of robotics, automation, and AI.

The fund has been listed on the London Stock Exchange in US dollars (ROAI LN) and on Xetra and Borsa Italiana in euros (ROAI GY and ROAI IM respectively).

It is linked to the proprietary Rise of the Robots NTR Index created by SG Index and based on the work of futurist Martin Ford, author of ‘Rise of the Robots: Technology and the Threat of a Jobless Future’.

Index candidates come from both developed and emerging markets that have been assigned to the robotics, automation and AI industry classification by the equity research department of Societe Generale, the parent company of Lyxor. Currently, 210 stocks have been identified as fitting this classification.

Each company in this universe is then assigned a composite score based on its relative positioning to other firms across three key ratios: R&D to sales, Return on Invested Capital (ROIC), and Sales Growth. Companies with higher ratios receive a higher composite score.

The index methodology then selects the 150 stocks with the highest composite scores with constituents weighted by their composite score in order to further enhance exposure to the robotics and AI theme.

Stocks from the US account for over half (55.0%) of the total index weight, followed by Japan (12.5%), Taiwan (5.8%) and Germany (4.2%). In terms of sector exposure, information technology companies account for the lion’s share, representing almost two-thirds (64.7%) of the total index weight, followed by Industrials with 22.4%, consumer discretionary with 6.2%, and health care with 6.0%.

The robotics and AI theme has proved fruitful for ETF issuers, with existing products based on the theme attracting $1.2 billion in new investment this year.

Funds include the $2.4bn iShares Automation and Robotics UCITS ETF (RBOT LN) and the $1.2bn L&G ROBO Global Robotics and Automation GO UCITS ETF (ROBO LN). The iShares fund tracks the iSTOXX Factset Automation and Robotics Index and comes with a TER of 0.40%, while the L&G fund tracks the ROBO Global Robotics and Automation Index and has a TER of 0.80%.

Amundi has also recently entered the space with the launch of the Amundi Stoxx Global Artificial Intelligence UCITS ETF (GOAI FP) tracking the Stoxx AI Global Artificial intelligence ADTV5 Index. It comes with a TER of 0.35%.

Lyxor believes its strategy is unique, offering investors a more bespoke approach that reaches beyond the firms involved in the development of robotics and AI to also include those that use it in their business.

Chanchal Samadder, Head of Equity Product Development at Lyxor, said, “As the market develops, the robotics and AI industry is likely to change significantly as more players create and adopt the technology. The unique universe captured by our ETF could really help investors stay at the forefront of this dynamic market.”

The fund comes with a total expense ratio of 0.40% and employs a swap-based replication method to track the index.

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