With the exponential growth of ETFs, “thematic investing” is rising and the “smart beta” theme is selling like hot cakes. Keeping up with this trend, the leading provider of thematic ETFs, First Trust, is looking to cash in on the two hottest untapped technologies – artificial intelligence (AI) and robotics – with the launch of the Nasdaq Artificial Intelligence and Robotics ETF ROBT.

ROBT Portfolio

The new fund looks to track the Nasdaq CTA Artificial Intelligence and Robotics Index, which measures the performance of companies engaged in AI, robotics and automation that are classified as either enablers, engagers or enhancers.

Engagers are the companies that help make robotics and AI products; enablers are companies that make components for robotics or AI like semiconductors; and enhancers are companies that provide their own value-added services within the AI and robotics ecosystem. The index then selects the top 30 companies within each category based on their rank. Engagers get 60% weight, enablers 25% and enhancers 15%.

Currently, the index features 88stocks with more than half of the portfolio dominated by information technology, closely followed by industrials (32.6%).

How does it fit in today’s portfolio?

The ETF could be an intriguing choice for investors seeking to gain exposure to the rapidly evolving field of AI and robotics technology.

While these are still in early stages of development, the technology is expected to see a huge surge in demand in the years ahead, given increased usage in diverse sectors including healthcare, industrials and technology. The technologies help in analyzing unstructured data like tweets, social media posts, photos and videos. Investors are thus betting big on these emerging technologies.

According to reports, the AI robots market is expected to rise from $3.49 billion in 2018 to $12.36 billion by 2023, at a CAGR of 28.78% between 2018 and 2023.