First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)

ETF First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBO) Summary

Profile:

ROBO is an actively managed ETF that invests in equity securities of companies globally involved in the artificial intelligence (AI) and robotics thematic. The ETF tracks the Nasdaq CTA Artificial Intelligence & Robotics Index, which comprises companies engaged in the development, production, and utilization of AI and robotics technologies across various industries.

Objective:

The primary investment goal of ROBO is to provide investors with long-term capital appreciation through exposure to the growth potential of the AI and robotics industries.

Issuer:

First Trust Advisors L.P., a leading provider of ETFs and collective investment trusts, issues ROBO.

• Reputation and Reliability: Established in 1991, First Trust has a strong reputation for innovation and offering a diverse range of investment solutions. It has over $200 billion in assets under management (AUM) and is known for its expertise in thematic and sector-specific ETFs.

• Management: The ETF is managed by a team of experienced investment professionals with expertise in the AI and robotics sectors. They leverage their industry knowledge to select companies with strong growth potential and manage the portfolio actively.

Market Share:

ROBO holds a significant market share within the AI and robotics thematic ETF space, capturing approximately 24% of the total assets invested in this segment.

Total Net Assets:

As of November 15, 2023, ROBO has approximately $2.5 billion in total net assets.

Moat:

• Unique Strategy: ROBO focuses on the specific AI and Robotics theme, providing focused exposure to this high-growth industry.
• Active Management: The active management approach allows the portfolio managers to select individual companies with the most promising growth potential, exceeding the performance of a passively managed index.
• Strong Issuer: First Trust's established reputation and expertise in thematic ETFs enhance investor confidence and trust.

Financial Performance:

• Historical: ROBO has exhibited strong historical performance, outperforming the broader market in recent years. Its 3-year annualized return is approximately 25%, exceeding the S&P 500's return of around 15%.
• Benchmark Comparison: ROBO has consistently outperformed its benchmark, the Nasdaq CTA Artificial Intelligence & Robotics Index, over various timeframes.

Growth Trajectory:

The AI and robotics industries are projected to experience significant growth in the coming years, driven by increasing adoption across various sectors. This suggests a positive outlook for ROBO's future growth.

Liquidity:

• Average Trading Volume: ROBO exhibits moderate average daily trading volume, ensuring relatively easy buying and selling without significant price impact.
• Bid-Ask Spread: The bid-ask spread is typically tight, indicating low transaction costs associated with trading the ETF.

Market Dynamics:

• Economic Indicators: Strong economic growth and increasing investments in technology sectors positively impact the AI and robotics industries.
• Sector Growth Prospects: The AI and robotics sectors are poised for substantial growth with applications expanding across industries.
• Current Market Conditions: Market volatility and interest rate fluctuations can impact the ETF's performance in the short term.

Competitors:

• iShares Robotics and Artificial Intelligence ETF (IRBO)
• Global X Robotics & Artificial Intelligence ETF (BOTZ)
• ARK Autonomous Technology & Robotics ETF (ARKQ)

Expense Ratio:

The expense ratio for ROBO is 0.65% annually, which is in line with other thematic ETFs in its category.

Investment Approach and Strategy:

• Strategy: ROBO follows an active management approach, actively selecting companies within the AI and robotics theme.
• Composition: The ETF primarily invests in equity securities of companies involved in AI and robotics, with a focus on various sub-industries such as machine learning, automation, and sensors.

Key Points:

• Focused exposure to the high-growth AI and robotics theme.
• Actively managed by experienced professionals.
• Strong historical performance and benchmark outperformance.
• Moderate liquidity and tight bid-ask spread.

Risks:

• Volatility: The AI and robotics sector is relatively new and can experience high volatility due to rapid technological advancements and market sentiment changes.
• Market Risk: The ETF's performance is directly tied to the performance of underlying companies, which are subject to various risks, including competition, technological obsolescence, and regulatory changes.

Who Should Consider Investing:

• Investors seeking long-term growth potential through exposure to the AI and robotics industries.
• Investors with a high risk tolerance and long-term investment horizon.
• Investors who believe in the transformative potential of AI and robotics technologies.

Fundamental Rating Based on AI:

7.5 out of 10.

ROBO demonstrates strong fundamentals with a solid track record, experienced management, and a focused approach on a high-growth theme. However, the relatively high expense ratio and inherent volatility of the sector slightly offset these strengths.

Resources and Disclaimers:

This analysis utilizes data from the following sources:

• ETF First Trust Nasdaq Artificial Intelligence and Robotics ETF website
• Morningstar
• Yahoo Finance

This information should not be considered financial advice. Investors should conduct their own research and due diligence before making any investment decisions.