IBOT ETF: Question and Answer
April 06, 2023
Read Time 3 MIN
Demand for robotics and automation has been growing. The pandemic only hastened ongoing trends in changing demographics and technology where robotics and automated systems are poised to become more widely incorporated into business and life. Shifting demographics and an increasing capability at a lower cost is driving the need for robotics at the industrial and service level. Here we address frequently asked questions about investing in robotics and, specifically, about the VanEck Robotics ETF (IBOT).
- What is a robotics company?
- What is the outlook for the robotics industry?
- What is the investible universe for the VanEck Robotics ETF (IBOT)?
- Is IBOT’s exposure purely a domestic focus or is this global?
- What differentiates IBOT from competitors?
- Where does robotics fit inside my portfolio?
- How can investors buy VanEck ETFs?
What is a robotics company?
A robotics company is a company that designs, develops, manufactures or sells robots or robotics systems for various applications. With advancing technology and complexity, robots can be found anywhere from factories to medical centers to households. Robotics companies often specialize in specific features like machine vision or software, while others create and manufacture complete robotic systems.
What is the outlook for the robotics industry?
The industrial robotics outlook is generally positive, with projections to grow from $50B in 2021 to $90B by 2026.1 Demand is strong for robotics technology in a variety of industries including manufacturing, healthcare, and logistics. Technological advancements have been driving robotics innovation and making industries more cost effective and efficient. Governments are also investing in the development of robotics technology for economic growth and to sustain labor as shortages become more prevalent.
What is the investible universe for the VanEck Robotics ETF (IBOT)?
The Bluestar Robotics Index tracks the performance of those companies that are involved in robotics, targeting companies that derive at least 50% of their revenues from one or more of seven subthemes. These themes include robots and manufacturing/industrial automation systems, robotic surgical systems, 3D printing, robotics or manufacturing computer aided design or other software, semiconductor manufacturing systems, machine vision, and embedded machine learning chips. Coverage includes global companies in developed markets, providing exposure to the world’s largest markets including China, the world’s leader in industrial robotics demand.
Is IBOT’s exposure purely a domestic focus or is this global?
IBOT has a global focus given the industry. The United States, Japan and Europe make up the majority of regions in focus. There is also high exposure to markets like China, the world’s largest market for robots. Many of these companies have had operations set up in China for decades, and they are investing heavily to increase efficiency and productivity.
What differentiates IBOT from competitors?
VanEck Robotics ETF (IBOT) is constructed using diversified subthemes that encompass the contributing segments that go into building robots. IBOT focuses on industrial robotic companies and uses strategic weighting to replicate the industrial robotics market. This is done by splitting the portfolio into seven subthemes that are spread across three tiers.
Tier One (50%)
Robots and Manufacturing/ Industrial Automation Systems
Additive Manufacturing (3D Printing)
Tier Two (25%)
Robotics or Manufacturing Computer Aided Design or Other Software
Tier Three (25%)
Robotic Surgical Systems
Semiconductor Manufacturing Systems
Embedded Machine Learning Chips
Each subtheme requires a minimum number of companies (30, 15, and 10, respectively) in order to help reduce concentration risk.
Where does robotics fit inside my portfolio?
IBOT is set up to capitalize off of long-term trends like shifting labor demographics, advancing technology, and lower costs to build robots. IBOT should be included in the specialized, growth sector of your portfolio. With a long-term investment horizon, you may consider allocating a portion of your portfolio to benefit from the growth of the robotics industry.
How can investors buy VanEck ETFs?
1 BCC Publishing, 2022.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
The Bluestar Robotics Index tracks the performance of those companies that are involved in robotics.
MarketVector Indexes GmbH develops, monitors and markets a focused selection of pure-play and investable indices designed to underlie financial products. They cover several asset classes including hard assets and the internal equity markets as well as fixed income markets. MarketVector Indexes is the index business of VanEck, a U.S. based investment management firm and provider of VanEck ETFs.
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An investment in the Fund may be subject to risks which include, among others, investing in the robotics industry, information technology sector, industrials sector, equity securities, medium-capitalization companies, Japanese issuers, foreign securities, semiconductor industry, depositary receipts, market, operational, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risk, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.
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