Investing in automation and robotics - How are companies capitalizing on robotics – and what does this mean for investors?
While we are still in the early stages of this disruptive trend, its long-term potential seems evident to a growing number of equity investors. And, with an opportunity set across both larger and smaller companies, robotics is increasingly being recognised as a potential viable investment and potentially superior growth area of the market.
Expected annual growth of the global robotics market until 2025.
Source: Boston Consulting Group, 2015
Our Robotech strategy seeks to provide investors with access the long-term superior growth potential of the robotics market, an expanding area of the economy with an increasing number of small and mid-cap investment opportunities. This includes:
- Industrial Automation: Technologies helping companies increase precision, reliability and efficiency across industries.
- Transport: Technological advances focusing on vehicle safety and the pathway towards autonomous vehicles. Additional opportunities outside of the car industry in areas such as agriculture and mining.
- Healthcare: Companies involved in robotic surgery, assistance and remote healthcare.
- Technology Enablers: The intelligence that powers and controls robotics. This provides the sensors, connectivity and intelligence used to gather and analyse information
Why invest in automation now?
The demand for industrial robots has accelerated in recent years due to the ongoing trend towards automation and innovative technological advancements. Advances in technology have made robots capable of performing highly sophisticated and delicate work as well as working alongside humans to drive productivity and efficiency.
We believe this is just the beginning of a multi-decade theme:
Worldwide supply of industrial robots
(units in thousands)
*Forecast. Source: AXA IM. Chart: IFR World Robotics 2019. Performance results of the past are not a reliable indicator for any future returns or trends. The growth of the global robotics market is not a reliable indicator of performance of the securities/companies which will be selected.
As robots become smarter, more flexible and increasingly capable of working alongside humans, they are being used across more industries:
- Alongside the automotive market, the semiconductor and electronics industry is the main user of industrial robots.
- The food and beverage industry has been one of the fastest-growing areas in terms of robotic use over the past few years.
Robotic precision is also useful for repetitive or dangerous jobs, such as hazardous materials testing.
Source: International Federation of Robotics as at 18 September 2019
Robots are also becoming more affordable while labour cost is increasing and the working population is shrinking in many countries.
Labour cost versus robot prices
Sources: Left-hand chart: BofA Merrill Lynch Thematic Investing, Robot Revolution – Global Robot & AI Primer, November 2015, Oxford Economics; Right-hand chart: ABB, Economic Justification for Industrial Robotic Systems, 2007; International Federation of Robotics, World Robots.
All investment involves risk and capital is not guaranteed. Such investment strategies are invested in financial markets and use techniques and instruments which are subject to some levels of variations, which may result in gains or losses. Additional risks may include Counterparty Risk; Credit Risk; or risks associated with the impact of any techniques such as derivatives or leverage.
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Ageing and Lifestyle
The number of over-60s is expected to triple in size between 2000 and 2050, creating challenges for companies and individuals*
Only 11% of global retail sales are transacted online, which will likely increase as smartphone adoption rises globally*
Huge demographic and environmental changes are forecast to make CleanTech a $3 trillion market by 2025*
The growth of the global middle class is at a 150-year high, boosting consumption in Asia and the developing world*
*Ageing & Lifestyle – World Population Ageing, United Nations, 2015
*Connected Consumer - AXA IM, Bank of America Merrill Lynch as at October 2019
*Automation - IFR World Robotics Report 2017, latest available data as of March 2018
*CleanTech – Clean tech market to exceed 3 trillion by 2025, Climate Action, 13 September 2012
*Transitioning Societies - UN, correct as at March 2018
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