A fund betting on robots and AI is crushing it — and it's targeting millennial investors (BOTZ)

pulse

August 16, 2017 3:03 PM

Robotics and artificial intelligence is a hot trend in the markets right now, and one fund is trying to capitalize on its growth.

A visitor speaks to Baidu's robot Xiaodu at the 2015 Baidu World Conference in Beijing, China, September 8, 2015.

When Jay Jacobs, director of research at Global X, was looking to start new theme-based exchange-traded funds last year, a robotics and artificial intelligence ETF just made sense.

The explosive growth of BOTZ makes sense. It combines the red-hot ETF market with skyrocketing tech stocks. Jacobs says it's the fastest growing funds he's been involved with in his four plus years with Global X. With returns of around 39.1% since the fund's inception last year, the growth is hardly surprising.

BOTZ is comprised of 29 companies spread across four sub categories: industrial automation, non-industrial robotics, unmanned vehicles and artificial intelligence. It's weighted by market cap, with no single company comprising more than 8% of the fund, and no less than 0.3%, according to Jacobs.

The largest holding is currently Mitsubishi, followed by Nvidia and Keyence Corp, each making up about 7.5% of the fund. Those top three holdings are up an average of 77.4% since the inception of BOTZ.

Global X has positioned BOTZ to be popular among a younger investing crowd. A strong majority of millennials, about 83%, are interested in thematic investing, compared to only 31% of the general population, according to a study done by the firm. When creating BOTZ, Jacobs said he had millennial investors in mind.

The ETF market for stocks has grown by 500% in the last eight years, in part because it allows for easy access to themes like AI and robotics. Investing in the fund is as easy as buying a stock.

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