How investors can benefit from the rise of the robots

Sheridan Admans, investment manager at The Share Centre, examines how investors can benefit from the rise of the robots on Cyber Monday.

How investors can benefit from the rise of the robots

Have you ever considered whether robots and artificial intelligence (AI) will one day replace the human work force or create jobs that once didn’t exist? Will robots ultimately improve productivity leading to a prolonged period of wage growth, something which has eluded central banks for the past decade? Or, will the rise of AI continue to make workers cheaper, as companies harness technologies that enable them to seek out and pit potential employees from around the world against each other?

All of these questions are important to contemplate given that there is an increasing presence of robotics in our lives and investors may want to consider how they can take advantage of the step change we are seeing in these technologies.

Robots are playing an ever larger role in our daily lives. Scientists and engineers have made significant strides from the dumb bots, those that have been very effective undertaking precise, repetitive work, such as those used extensively in the car industry.

Artificial intelligence systems are also becoming entrenched, operating silently in the background, relying on more than we may immediately recognise. From personal assistants like SIRI to self-driving cars, AI often depicted in fiction as taking on a human form, today manifests itself as search algorithms such as those used by Google, news generation often referred to as ‘news bots’, medical diagnoses and minimally invasive prostatectomies to cybersecurity and autonomous weapons systems.

The acceleration in robotics and AI is being led by improvements in power, with better battery storage and greater energy deployment efficiency. New materials are changing the way robots are being built as well as the tasks they perform. Advances in computing power and the ever decreasing costs of that power are making it more accessible for start-ups and universities with little capital to experiment with designs that tackle more everyday human needs. 3D printing has helped developers experiment with their designs more quickly and at a fraction of what it would have once cost.

Indeed, algorithms and the processing of big data are helping robots make more sense of the world/environment they are being asked to operate in. This has led to more advanced robots which are more autonomous, able to respond more effectively and adapt to complex tasks and situations.

How will robots affect productivity and jobs?

Investment by companies in automating parts of their operations should increase efficiencies that will inevitably lead to more productivity growth, which is important, as it is closely related to growth in our standards of living. Despite the scare stories that robots and AI will eventually make humans redundant as a species, history has shown us time and again that automation helps our overall standard of living rise, literacy rates improve, average life span increase and creates jobs.

Investors should appreciate that while humans might have to become more adaptable in their approach to work, automation is likely to boost productivity. Robots are also likely to support job creation as-much-as making some human jobs redundant. While it has been true so far those robots in the work place have taken over more low-skilled tasks, it has also led to employers seeking higher skilled employees to carry out higher value work.

Where can investors get exposure?

Below are collective investment strategies that invest in companies associated with the development of autonomous and robotic technology, use these technologies in their products and services, or use algorithms to analyse vast amounts of data to get a performance edge over more traditional investment processes.

Funds

Pictet Robotics is a fund which invests mainly in securities of companies that contribute to and/or profit from the value chain in robotics and enabling technologies. The manager favours companies operating in areas such as Robotics applications and components, automation, autonomous systems, sensors, microcontrollers, 3D printing, data processing, actuation technology. As well as image, motion or voice recognition and other enabling technologies and software, giving investors a broad range of opportunities.

AXA Framlington Global Technology: From cars to healthcare, communication to banking and manufacturing, this fund provides investors access to companies where the business is focused on end user applications such as Google, Facebook, Apple and Cisco Systems.

Goldman Sachs Global Core Equity portfolio seeks an edge over its global investing peers by mining through vast amounts of data on a daily basis using algorithms and data analytical tools to help in the portfolio’s construction. This fund is an example of a fund manager using big data to outperform more traditional human-only fund managers.

Index trackers

Investors with a preference for index trackers might consider the iShares Automation & Robotics ETF which seeks to track the performance of an index composed of developed and emerging market companies which are generating significant revenues from specific sectors associated with the development of autonomous and robotic technology. Another suitable option could be the ETFS ROBO Global Robotics and Automation which tracks the performance of the ROBO Global® Robotics and Automation UCITS Index.

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest and tax policies may change. 

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