Direxion Launches Leveraged Robotics ETF

Direxion launched a leveraged fund on Apr 19, focused on providing exposure to the global robotics and Artificial Intelligence (AI) space.

Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares UBOT seeks to track, before fees and expenses, the performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index.

Fund Characteristics

The market-cap weighted index looks to provide exposure to exchange-listed companies in developed markets that are poised to benefit from adoption of AI and robotics.

The fund charges a fee of 122 basis points a year and provides triple leveraged (300%) exposure to its underlying index. The index’s top three holdings include Intuitive Surgical Inc (NASDAQ:ISRG) , Nvidia Corp (NASDAQ:NVDA) and Yaskawa Electric Corp, with 8.9%, 8.8% and 8.0% exposure, respectively.

How Does it Fit in a Portfolio?

The global robotics market is experiencing robust growth as demand for automation is increasing. With the advancement of technology and a drive toward more efficient business operations, robotics sector has garnered a lot of investor attention, as they seek to get a share of the pie of returns this sector offers.

Owing to the increased attention this sector has garnered, robotics ETFs are a great way to gain diversified exposure to the space. "The robotics, artificial intelligence, and automation industries are rapidly growing and evolving," Sylvia Jablonski, Managing Director at Direxion said. "The launch of UBOT allows traders to take a bold position in companies that are on the forefront of technology," she added.

However, investors should note that leveraged ETFs are complex instruments and not suitable for long-term buy and hold portfolios. These ETFs employ strategies to attain their goals on a daily basis. Hence, in a long-term setting, performance of these funds might significantly differ from their stated objectives.

Other Funds in the Space

Although there are no other leveraged funds offering exposure to the space, below we discuss a few other regular ETFs that seek to provide exposure to the robotics sector (see all Technology ETFs here).

ROBO Global Robotics and Automation Index ETF (NASDAQ:ROBO)

This fund seeks to provide a diversified exposure to Robotics stocks and tracks the Robo-Stox Global Robotics and Automation Index. It has AUM of $2.4 billion and charges a fee of 95 basis points a year.

The fund is heavily inclined toward Computing, Processing & AI, Manufacturing & Industrials and Actuation, with 18.0%, 16.0% and 14.0% exposure, respectively. The fund’s top three holdings are Hiwin Technologies Corp, Fanuc Corp and Krones AG with 2.2%, 2.0% and 2.0% allocation, respectively. From a geographical perspective, the fund’s top three allocations are to the United States, Japan and Germany, with 39.0%, 29.0% and 9% exposure, respectively. The fund has returned 34.2% in a year and 2.9% year to date.

Robotics & Artificial Intelligence ETF BOTZ

This fund seeks to invest in companies that have chances of benefitting from increased demand of robotics and AI. It tracks the same index as UBOT. The fund has AUM of $2.6 billion and charges a fee of 68 basis points a year.

The fund is heavily inclined toward Industrial Machinery, Electronic Components and Electronic Equipment & Instruments, with 28.4%, 13.7% and 12.4% exposure, respectively. The fund’s top three holdings are Intuitive Surgical Inc, Nvidia Corp and Yaskawa Electric Corp, with 8.9%, 8.8% and 8.0% exposure, respectively. From a geographical perspective, the fund’s top three allocations are to the Japan, United States and Switzerland, with 50.8%, 26.9% and 8.6% exposure, respectively. The fund has returned 41.3% in a year and 2.5% year to date.

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