Are you investing in a masterpiece—or a cheap imitation?
Dan Robbins died on April Fools’ Day this year at the age of 93. It seemed somewhat appropriate for the creator of that once favorite American hobby: paint-by-numbers. Robbins came up with the idea back in the 1940s after learning that Leonardo da Vinci had numbered the sections of his canvases to instruct his apprentices where to paint a certain color. The result was a simple, plug-and-play method that allowed even those of us without a creative bone in our bodies to “paint” like an artist. When each color is applied according to the numbers, the final product can look almost shockingly impressive—from a distance. But take a step closer and it’s easy to recognize the lack of artistry involved. Coloring between the lines creates the illusion, but it by no means results in a true masterpiece.
As I read about Dan Robbins and his clever idea, I couldn’t help but see the parallel between painting by numbers and the short cuts that are often used to create an index. With the number of index providers and the size of their menus growing every day, it can be easy for investors to get overwhelmed. In a “paint-by-numbers” environment, how can you distinguish between the imitators and the innovators?
One place to begin—especially when evaluating thematic investment strategies that are designed to capture the future growth of robotics, automation, and AI (RAAI)—is by asking, “What is the exposure?” Seeking the answer can reveal which strategies are the true innovators designed to deliver real value, and which, like a paint-by-numbers “artist,” are merely offering a cheap imitation.
At ROBO Global, we believe that investing in the future of automation and AI requires a strategy that simply can’t be achieved through imitation. That is precisely why we build our high quality portfolios on the solid foundation of depth, consistency, and conviction.
Robotics and AI is one of the fastest-growing sectors in the market, with new investors entering the space daily. But there is inherent risk in investing in an index with shallow roots. Without depth of both research and expertise, there cannot be quality, and without quality, the potential for meaningful exposure can be diminished to a guessing game.
The ROBO Global Robotics & Automation Index has been built from the ground up based on the research and insights of our financial team and our Strategic Advisory Board. Our strategic advisors include 10 of the top experts in the field of robotics, automation, and AI—PhDs, professors, and innovators who understand how the evolving technologies and applications are likely to impact the future. Rather than focusing on market cap, momentum, or market hype, our experienced team is immersed in the very real innovations that are emerging to help identify tomorrow’s leaders. Every single company in the ROBO index is researched in depth to determine the viability and applicability of its products and solutions, vetted for liquidity and adherence to the ROBO Global ESG policy, and assessed to be certain it meets our minimum threshold for revenues derived directly from robotics, automation, and AI. Even more, this exploration is revisited every quarter.
Creating new ETFs has become a competitive game for many of the large, brand-name providers of index funds. At these companies, the primary focus is on selling, with a fund manager typically handling multiple funds while a marketing team sits in a conference room dreaming up how to rebrand and re-market successful strategies. The market-cap weighted funds they distribute are typically based on basic criteria like a “fit” into the sector, historical returns, and momentum, with most of the research outsourced to third-party data sources like FactSet. And if their latest brainstorm simply doesn’t pan out? They drop it and shift their focus to capturing the next big seller. These heavily marketed, brand name funds are created quickly and priced cheaply with the hope of minimizing competition and capturing as much market share as possible. Who benefits? The ETF providers—not the investors.
At ROBO Global, we focus solely on disruptive technology and innovation. We were the first to market with a robotics and AI-themed index in 2013, and we haven’t wavered since. The ROBO Global Robotics & Automation Index offers specific, focused exposure based on our own diligent research. This is precisely why the ROBO index has minimal overlap with robotics and AI-themed competitors. Consistency is the key to quality, and it is one of our greatest strengths.
At ROBO Global, we have 100% conviction in our index. Why? Because we are not simply licensing another index from a catalogue of many. We focus all day, every day, on creating meaningful exposure to the robotics, automation, and AI sector by identifying companies that are delivering today’s most promising innovations and are most likely to benefit from the tremendous growth in RAAI. Most often, these are not the widely followed, mega cap companies that are included in “me too” indexes, but rather the companies that have not yet attracted the attention of mainstream analysts and financial media, and that have little overlap to traditional market indices. Because we have conviction in our desire to deliver real value, we do the real work that’s needed to identify the companies that are poised to drive explosive growth as the robotics, automation, and AI revolution continues skyward—and positioned to reward investors as they rise skyward.
Like art, not all indexes are created equally. Investors who choose quality—above all—will be best positioned to enjoy a true ”masterpiece” for the long haul. At ROBO Global, we have built our ROBO Global Robotics & Automation Index to last. With depth, consistency, and conviction, we plan to keep it on track for growth for years to come.
To learn more about the ROBO Global index methodology, selection methodology, and how the universe of robotics, automation, and AI companies is sourced, visit the ROBO Global Index Series page on our website.
By Travis Briggs, CEO, ROBO Global
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