Best Robotics ETFs – Benzinga

Artificial intelligence (AI) has been the hottest investing trend of 2023, and its reach could extend into a vast range of market sectors. AI advancement can potentially transform industries like healthcare, manufacturing, computer science, data processing and wealth management in the coming years. 

But while generative AI applications like ChatGPT have stolen the headlines, robotics is one area of the market that seems welded to AI in terms of investment products. This article considers how robotics benefits from AI research and lists the best funds for exposure to this hybridized sector.

Here are Benzinga’s top picks for investors looking for exposure to robotics and AI ETFs.

• AUM: $449 million
• Current price: $30.74
• Expense rate: 0.47%
• Dividend yield: 0.62%

IRBO is the first ETF on the list because it has a little something for everyone: a fair expense rate, diverse international holdings, a large asset base and plenty of liquidity. Over 50% of the fund’s holdings are American, but it also holds stocks from Europe, Japan and Taiwan that retail investors traditionally cannot access. It could be a well-rounded choice for investors who want affordable global exposure.

• AUM: $152 million
• Current price: $17.70
• Expense rate: 0.45%
• Dividend yield: 0.16%

WTAI is focused more on domestic AI and robotics firms. Nearly 75% of its holdings are American companies, including semiconductor giants like NVIDIA, Advance Micro Devices and ON Semiconductor. The fund also holds stocks from Japan, the Netherlands, the Cayman Islands and South Korea. WTAI is cheaper than IRBO, but the portfolio is less diverse, and the yield is miniscule.

• AUM: $412 million
• Current price: $41.22
• Expense rate: 0.65%
• Dividend yield: 0.32%

ROBT is pricier than the previous two ETFs. However, it offers a good combination of domestic and international stocks across a broader spectrum of businesses from the United States, Japan and Europe. While many ETFs in this sector focus on software, ROBT has increased exposure to fields like electrical equipment and machinery.

• AUM: $502 million
• Current price: $27.29
• Expense rate: 0.68%
• Dividend yield: 0.29%

If you’re looking for large-cap stocks, you may be interested in AIQ. The fund holds primarily large American tech companies (over 66%) but also has allocations to Asia (14%) and Europe (7%). However, over 90% of the holdings are large-cap firms, which makes the 0.68% expense rate seem a bit high for the fund’s objectives.

• AUM: $2.2 billion
• Current price: $25.73
• Expense rate: 0.68%
• Dividend yield: 0.19%

BOTZ is one of the largest robotics ETFs available, with over $2 billion in assets. The fund holds only 46 stocks, but the allocation is spread out over several industries, including machinery, electronic equipment and healthcare equipment. Most of the fund’s investments are spread between three nations: the United States (50%), Japan (29%) and Switzerland (11%).

• AUM: $7.2 billion
• Current price: $124.99
• Expense rate: 0.08%
• Dividend yield: 0.70%

Investors looking to minimize expenses might consider FTEC, which has broader exposure to the tech sector than most ETFs here but has a minimal 0.08% expense ratio and a massive asset base of more than $7 billion. Over 96% of the fund’s holdings are American firms, and it pays a higher dividend than most robotics ETFs.

• AUM: $394 million
• Current price: $116.23
• Expense rate: 0.40%
• Dividend yield: 1.50%

Finally, some dividend yield! EXI is an old-fashioned ETF holding stocks in legacy companies like Caterpillar, Boeing and Honeywell. A pure play on the mechanical aspects of robotics, EXI has exposure to industries like machinery, aerospace, electrical equipment and infrastructure. The expense rate is also fair for a fund with an extensive global portfolio.

A robotics ETF is a fund with an investment theme in robotics and AI. Robotics ETFs are often smaller funds that track obscure indices like the Nasdaq CTA Artificial Intelligence and Robotics Index. Many of these ETFs follow a passive indexing style, but with high expense rates and portfolio turnover, most are actively managed funds in disguise.

ETFs can be a great way to invest in this sector because investors don’t have to worry about picking winners in a competitive market. ETFs allow investors to get broad or narrow exposure to robotics through different baskets of companies. No best robotics ETF exists — each investor must consider their goals and risk tolerance versus the fund’s objectives.

• Investment in innovators: Artificial intelligence and robotics are examples of exciting new tech trends with tremendous potential in their ability to improve certain avenues of everyday life and through the potential returns for investors. 
• Outsized return potential: Like many areas of the tech sector, the robotics and AI race will be cutthroat. However, the winners in this area could see significant gains.
• Industry growth: Few industries have better growth prospects than artificial intelligence, and robotics stand to be a primary beneficiary of its advancement. Global market projections suggest the AI industry will be worth $1.5 trillion by 2030.

• High expense rates: Active managers rule the robotics ETF landscape. Lots of stock picking occurs in this arena, so managers have high research budgets. If a low expense ratio is an essential prerequisite, you might feel more comfortable in a broader ETF class.
• Volatile holdings: Investors choose ETFs to minimize volatility, but what if your fund’s holdings are all volatile? Robotics companies tend to have high beta stocks, so be prepared for more volatility than the broader market.
• Minimal yield from dividends: Robotics ETFs are comprised chiefly of tech firms with significant R&D expenses, so the dividend yield on these funds is low compared to other sector ETFs.

Looking for a quality broker for your ETF investments? Here are Benzinga’s top choices:

Before picking an ETF, you’ll need to consider the following factors.

Investors can’t control their ETFs’ market price but can control how much they pay the fund’s manager. Robotics ETFs tend to have higher-than-average expense rates, so compare each fund’s holdings and strategy and ensure you’re getting the fairest fees.

Thematic ETFs lean small regarding AUM, which can affect share liquidity and economies of scale in fund expenses. Smaller funds might accomplish more specific objectives but also run the risk of failure. Be sure to weigh the pros and cons of large vs. small asset bases.

Past performance data may not predict future investment returns, but lousy management often leaves a trail. Comparing the historical returns of two similar funds may provide insight into management quality.

Robotics ETFs can have a variety of holdings. Some may concentrate on smaller domestic companies, while others look for large firms globally. Investors who prefer certain regions or company sizes should compare funds before buying in.

The current market price of many robotics stocks shows the benefit they’ve received from AI, but investors should still be cautious. Many AI-adjacent stocks have been volatile recently, and robotics ETFs have higher expenses than traditional sector ETFs. However, ETFs with fair expense ratios and diverse portfolios could be ideal for this volatile sector.

ETFs were chosen based on the following factors:

• Liquidity: Large asset base and share float
• Fees: Fair expense rates for the fund’s objectives
• Exposure: Diverse robotics sector holdings