The word “robot” conjures up images of C3PO and R2D2, endearing characters that even more than 30 years after their creation, have left an indelible impression.
Alas, it’s going to be a number of years before those kinds of humanoids, appealing though they may be, become commonplace, said Frank Tobe, co-founder of ROBO-STOX, an investment firm geared toward the robotics industry, but that doesn’t mean the robotics sector isn’t one that investors should consider.
In fact, Tobe says he believes it’s one of the most interesting places to be a part of for investors with a long-term horizon.
Tobe, a former statistician and computer programmer who served as consultant to the U.S. government, became extremely interested in the robotics sector a number of years ago.
“Through my career, I saw all the changes that were happening so rapidly with computers and the way in which artificial intelligence was developing, even though computer robots are a relatively new phenomenon,” he said. “I decided this would be a great sector to invest in, so I called my broker and told him I wanted to invest in a basket of stocks that were robotics related. He gave me two.”
That was in 1999, and although Tobe shopped around for more options (Bloomberg, he said, later offered him a selection of robotics stocks, 75 of which were duplicates: “companies with Japanese and European listings”), he wasn’t satisfied.
“I decided to go out, do my own research and create my own basket of robotics stocks and share that information with others,” he said.
And in due course, Tobe – whose online blog, www.robotreport.com, soon drew a healthy following among members of the investment community – was approached by financiers to turn his basket of stocks into an investment product.
That’s how the ROBO-STOX was born.
The index features 81 stocks from across the world – many of which are Japanese or from other Asian countries – that have more than $200 million in market capitalization and are sufficiently liquid. These companies represent the best in new robotics technology around the world, Tobe said, and they’re developing automation for anything from unmanned devices for under the water and in the air, to surveillance.
Tobe created the first index to provide a comprehensive and focused measure of the value of robotics, automation and related technologies. As the first global robotics ETF, the ROBO-STOX Global Robotics and Automation Index ETF (ROBO) began trading last October and crossed over $100 million in assets, Tobe said.
Today, the robotics sector is garnering an increasing amount of interest, Tobe said, for three main reasons:
1. Every year, computer power is increasing and it’s costing far less to generate that power. Software capabilities are also improving in leaps and bounds and artificial intelligence is being used more and more in many different areas. All of that has resulted in “a greater awareness by the financial community that’s leading to more investments that in turn are creating real business solutions out of ideas, many of which have their beginnings in college theses,” Tobe said.
2. The way in which the internet has changed the nature of business means that automation is more and more the order of the day and machines are, inevitably and increasingly, replacing human beings. Companies like Amazon and Walmart, for instance, must automate their distribution capabilities, and as e-commerce grows in emerging markets, the needs for automated distribution will only increase, Tobe said, rapidly replacing the packing and carrying work performed by human beings in warehouses.
3. And although it’s going to be a while before we have talking, walking and emotional companions like R2D2 and C3P0 in our homes, automation in consumer products is also increasing in leaps and bounds. In the U.S., robotics-based floor cleaners are becoming the order of the day in more homes, Tobe said, and companies like South Korea’s LG Electronics and Samsung are carrying the technology forward. In Japan, more companies are looking at ways in which robotics – which is already in great use in the medical field – can be used for other healthcare purposes, particularly as that applies to the elderly.
“Senior citizens in Japan like to garden, but it’s hard to be down on your knees when you’re old, so the Japanese government has changed their insurance systems to pay for older people to have these little robots that do the weeding and other work,” he said.