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.
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.
What you need to know about industrial robotics
The demand for industrial robots has accelerated due to the ongoing trend towards automation and innovative technological advancements.
Semiconductors: The brain enabling technology shifts
The semiconductor industry has enjoyed significant growth in the digital age - a trend expected to continue
How are robots driving growth in non-automotive industries?
Since the 1950s, robotics have historically been applied to – and has been instrumental in the development of – the automotive industry, cutting out time-intensive inefficiencies such a ...
Ageing and Lifestyle
The number of over-60s is likely to grow more than 5 time faster than the under-60 population until 2030*
Just 9% of retail transaction are made online today, which will likely grow as smartphone adoption rises globally*
Huge demographic and environmental changes are forecast to make CleanTech a $1.3 trillion market by 2020*
The growth of the global middle class is at a 150-year high, boosting consumption in Asia and the developing world*
*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
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