Automation

Investing in automation and robotics - How are companies capitalizing on robotics – and what does this mean for investors?

What is Automation?

Automation is the creation and application of technologies to improve or optimise processes. Automation began life on the factory floor, as automotive companies aimed to improve manufacturing techniques, but has since evolved to influence multiple aspects of how we live and work.

What are the potential benefits of investing in Automation?

Automation can help companies:

  • Increase efficiency and lower costs
  • Improve reliability and consistency
  • Perform highly sophisticated and delicate tasks
  • Work safely alongside human workers
  • Keep pace with customers’ increasingly on-demand preferences

While we are still in the early stages of this disruptive trend, its long-term potential seems evident to a growing number of equity investors. With an opportunity set across both larger and smaller companies, robotics is increasingly being recognized as a viable investment and potentially superior growth area of the market. 

10-15%

Expected annual growth of the global robotics market until 2025.
Source: Boston Consulting Group, 2015

Our Robotech strategy seeks to provide investors with access the long-term superior growth potential of the robotics market, an expanding area of the economy with an increasing number of small and mid-cap investment opportunities. This includes:

  • Industrial Automation: Technologies helping companies increase precision, reliability and efficiency across industries.
  • Transport: Technological advances focused on vehicle safety and the pathway towards autonomous vehicles. Additional opportunities outside of the car industry in areas such as agriculture and mining.
  • Healthcare: Companies involved in robotic surgery, assistance and remote healthcare.
  • Technology Enablers: The intelligence that powers and controls robotics. This provides the sensors, connectivity and intelligence used to gather and analyse information

Why invest in automation now?

The demand for industrial robots has accelerated in recent years due to the ongoing trend towards automation and innovative technological advancements. Advances in technology have made robots capable of performing highly sophisticated and delicate work as well as working alongside humans to drive productivity and efficiency.

We believe this is just the beginning of a multi-decade theme:

Worldwide supply of industrial robots
(units in thousands)

As robots become smarter, more flexible and increasingly capable of working alongside humans, they are being used across more industries:
Alongside the automotive market, the semiconductor and electronics industry is the main user of industrial robots.
The food and beverage industry has been one of the fastest-growing areas in terms of robotic use over the past few years.
Robotic precision is also useful for repetitive or dangerous jobs, such as hazardous materials testing.

Source: International Federation of Robotics as at 18 September 2019

Robots are also becoming more affordable while labour cost is increasing and the working population is shrinking in many countries.

Labour cost vs robot prices 

                             

 

 

Source: Left-hand chart: BofA Merrill Lynch Thematic Investing, Robot Revolution – Global Robot & AI Primer, November 2015[IA1] [YI2] , Oxford Economics; Right-hand chart: ABB, Economic Justification for Industrial Robotic Systems, 2007[IA3] [YI4] ; International Federation of Robotics, World Robots.

All investment involves risk and capital is not guaranteed. Such investment strategies are invested in financial markets and use techniques and instruments which are subject to some levels of variations, which may result in gains or losses. Additional risks may include Counterparty Risk; Credit Risk; or risks associated with the impact of any techniques such as derivatives or leverage.

*Ageing & Lifestyle - US Department  of Commerce, latest data available as of March 2018
*Connected Consumer - Citi Research, Citi GPS “Technology at work v3.0”, August 2017
*Automation - IFR World Robotics Report 2017, latest available data as of March 2018.
*Transitioning Societies - UN, correct as at March 2018
*Performance Drivers - AXA IM, correct as at 29 December 2017

Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. References to league tables and awards are not an indicator of future performance or places in league tables or awards and should not be construed as an endorsement of any AXA IM company or their products or services. Please refer to the websites of the sponsors/issuers for information regarding the criteria on which the awards/ratings are based. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

Issued in the U.K. by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the U.K. Registered in England and Wales, No: 01431068. Registered Office: 155 Bishopsgate, London, EC2M 3YD (until 31st December 2020); 22 Bishopsgate, London, EC2N 4BQ (from 1st January 2021).

In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.