The popularity of RAAI (Robotics, automation, and artificial intelligence) technologies has seen many companies adopt robotic applications. RAAI technologies are fast becoming must-have concepts for companies across the world. However, it’s important to understand that investment strategies and robotic investments vary.
As exchange-traded fund providers and investment firms compete to deliver robotics-based products, they should consider evaluating each approach with caution. Here are some tips to help you analyze the pros and cons of each approach in order to choose an investment concept that meets the needs of your company and satisfies your long-term objectives.
Choose Investments that are Suitable for your Existing Portfolio
Diversification in the current market is critical. Many entrepreneurs rely on RAAI to provide unique diversification. However, many approaches comprise of a short list, often times approximately less than twenty companies of ordinary large-cap equities, which is why they are highly likely to fail.
While such companies may currently be market leaders, chances are you’ve listed them in your portfolio. Don’t pick a fund simply because it claims to provide robotic arm solutions. Evaluate each fund to establish whether its holdings support no or low correlation with ordinary equity benchmarks and whether the holdings generate an overweighting of big cap exposures.
Establish a wide variety of exposures using limited weighting the market cap, power of the individual stock, and growth notwithstanding.
Seek Advice from Robotics Experts
Robotics is an evolving and complex industry. Predicting the future of robotics or the companies which can support the approach adequately can be a difficult task that requires more than financial evaluation.
Adopt investment strategies that rely on advice from robotic experts, entrepreneurs, and academics. This group of experts is better placed to provide insight and knowledge about evolving trends and recognize the most competitive new technologies.
Further, they can understand the complex interconnection between specific applications and technologies. Companies can benefit more from a research-focused approach in terms of choosing players with high growth and revenue generation potential.
Establish the Biggest Growth Potential
Entrepreneurs can easily assume that the big names with the biggest market caps are capable of delivering the largest return on investment. However, the emerging technologies often developed by public or private, mid and small cap companies in the robotics industry have the biggest potential for growth.
As the drivers of the robotics supply chain, the aforementioned companies provide the capabilities and components that sustain multiple products in various areas across numerous industries.
Here lies the ultimate opportunity for growth. Focus beyond strategies that rely on large-cap equities with a limited association to RAAI, and concentrate on those which leverage on a wider growth opportunity for mid and small cap companies.
Maintain Minimum Costs
The robotics industry is fast evolving, a clear indication that a passive index will require regular rebalancing and modification for continued growth opportunities. In an entirely active approach, such shifts can increase transaction volumes to maintain a high level of exposure at the opportune time and to the right companies.
Leverage on a cautiously chosen portfolio instead of relying on a financial hit for every trade. This will allow redistribution and rebalancing in the fund wrapping, which will relieve individual investors of major costs. Still, you shouldn’t focus on cost only. Pick a fund that provides a reliable performance track record and exposure to RAAI in order to get your preferred value.
Seek for Diverse Robotics Exposure
Just because a fund or index comprises of the word robotics shouldn’t be reason enough to convince you that they can help you understand robotics. In a bid to leverage the rising popularity of robotics investments, many marketing companies are including “robotics” to enhance the performance of their brands.
However, their holdings differ from the name. To enhance your robotics exposure, search for diverse concepts with companies whose holdings are directly associated with RAAI. The best strategies target companies in every sub-sector of the exhaustive RAAI ecosystem and are designed to recognize emerging trends in the industry.
Robotics strategies are evolving every so often. Investors should evaluate the development of each solution to establish whether it meets their company goals.