Some investors like to look at individual companies that they think will generate high growth. Others look to invest broadly in what we call “megatrends”. The BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) is one ETF that does just that.
Investing in megatrends
Every investor is looking for growth, but there are some industries more capable of producing that growth than others. One way to invest is to try to identify “megatrends”, defined by Blackrock as “powerful, transformative forces that could change the global economy, business and society”.
Some current megatrends might be things like virtual reality, digital advertisement, or cybersecurity. Two trends that are definitely transforming the way we live are robotics and artificial intelligence, and the RBTZ ETF aims to provide investors with exposure to these transformative powers.
RBTZ invests globally in companies involved in industrial robotics and automation, non-industrial robots, artificial intelligence and unmanned vehicles and drones. While the ETF is currently below our preferred size of $100 million-plus (around $83 million), it is growing quickly and has taken inflows of more than $20 million through September and October alone.
Inside the ETF, you’ll find 31 companies from a range of developed economies but predominantly Japan and the US. The two biggest sub-sector allocations are industrial machinery and electronic equipment and instruments, but investments are spread relatively evenly over more than 10 sub-sectors in total.
RBTZ launched in September 2018 and has returned 13.25% per year including distributions. The 12-month trailing distribution yield sits at around 4.2%, but it should be noted that this ETF does not pay franking credits as there are no Australian companies in the portfolio.
Fees and risks
When investing in these megatrends it is important to consider valuation. Many of these industries and sub-sectors have experienced significant growth over the last few years and now have lofty valuations that could affect future returns. This is a high-risk, high-reward ETF and you should expect a lot of volatility if you’re going to invest.
RBTZ charges a 0.57% management fee, which is about average for a thematic ASX ETF. If you’re considering investing or just want to know more, check out our free report on RBTZ.