ROBO Global, the advisory and indexing firm behind the first pure-play robotics ETF, has launched a new disruptive technology ETF in the US that tracks companies leading the artificial intelligence revolution.
The fund provides worldwide exposure to companies leading the artificial intelligence revolution.
The ROBO Global Artificial Intelligence ETF (THNQ US), brought to market in partnership with white-label platform Exchange Traded Concepts, has listed on NYSE Arca and comes with an expense ratio of 0.68%.
“The transformative power of AI is irrefutable,” said Travis Briggs, CEO of ROBO Global US. “Companies around the world are turning to AI to outpace their competition, and the proof points are in the data. The AI market is expected to reach $390 billion by 2025 with AI technologies estimated to increase global economic output by $13 trillion over the next decade.”
The fund is linked to the proprietary ROBO Global Artificial Technology Index which selects its constituents from a universe of developed and emerging market stocks that have market capitalizations greater than $200 million and three-month average daily trading values of at least $1m.
The index uses ROBO Global’s industry classification system to identify companies with operations in at least one of eleven sub-sectors linked to AI: business process; consulting services; big data analytics; cloud providers; network security; cognitive computing; e-commerce; healthcare; factory automation; semiconductor; and consumer.
Each eligible company is individually analyzed and assigned a score between 1 and 100 based on factors such as the proportion of revenue attributable to relevant subsectors, the level of investment made into AI technology, and the firm’s leadership position within its market.
The methodology selects the highest-scoring companies with scores above 50, up to a maximum of 100 stocks. If fewer than 50 stocks have scores above 50, the index selects the highest-scoring companies until 50 constituents have been chosen.
Constituents are weighted according to their scores so as to heighten exposure to the underlying theme. Reconstitution and rebalancing occur on a quarterly basis.
“With a proven track record, ROBO Global is uniquely positioned to provide the underlying index for THNQ,” said Briggs. “Our team is exclusively focused on innovative technologies, and our strategic advisory board, stacked with seven Ph.D.s, includes some of the world’s most prominent and celebrated robotics and AI researchers. Together, we have an intimate understanding of the entire AI ecosystem and how that value can be delivered to investors.”
Interestingly, the fund is the only pure-play AI ETF available in the US with rival issuers preferring to package the AI and robotics themes together. BlackRock, Global X, First Trust, and ARK Invest all offer products along this line – the largest being the $1.3bn Global X Robotics & Artificial Intelligence ETF (BOTZ US) which also comes with an expense ratio of 0.68%. The cheapest is the $100m iShares Robotics & Artificial Intelligence Multisector ETF (IRBO US) which costs 0.47%.
The launch brings the number of ROBO Global disruptive technology ETFs in the US to three. Apart from the blockbuster $1.0bn ROBO Global Robotics and Automation Index ETF (ROBO US), the firm also introduced the ROBO Global Healthcare Technology and Innovation ETF (HTEC US) in June of last year, although this fund has yet to generate significant investor demand.
All three of ROBO Global’s disruptive technology strategies are available in Europe through ETFs offered in partnership with Legal & General Investment Management.