First Trust enters the robot race
First Trust is listing a robotics and AI ETF, adding another product to this increasingly popular space. The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) will track an index built by Nasdaq and the Consumer Technology Association. The index puts AI and robotics companies into three groups:
(1) engagers: companies that help make robotics and AI products;
(2) enablers: companies that make the components for robotics or AI, like semiconductors;
(3) enhancers: companies that provide their own value-added services on top of Engagers.
Once grouped, companies that fail to meet liquidity and size requirements are excluded. Remaining companies are then ranked based on how exposed their business is to the AI/Robotics sector within its respective engager, enabler or enhancer category. The index then selects the top 30 companies within each category based on their rank. Engagers getting 60% weighting; enablers 25% and enhancers: 15%. Companies are equally weighted within their groups.
Analysis – a common pattern
Robotis ETFs have provided a fertile oasis for small and medium-sized issuers. Global X, recently acquired by Mirae Asset, is the second biggest US provider of AI ETFs. Its BOTZ fund has been the most successful new listing the past two years, gathering more than $2.1bn in 15 months. Robo Global and white labeller Exchange Traded Concepts still have the biggest, with their ROBO fund also sitting on $2.2bn.
First Trust, the sixth largest US issuer, entry into this space fits a pattern: small nimble issuers find niches and prove they can work. Big players then come in and try to take market share. It’s not clear how ROBT will compete with Global X’s BOTZ or Robo Globals ROBO. It’s more or less the same price as BOTZ and offers the same thematic exposure.
Whitford Asset Management is listing a new ETF that deserves prizes for its short sharp name and unusual indexing method which basis rebalancing around Wednesdays. The Volshares Large Cap ETF (VSL), will track an in-house index of 25 equally weighted US large caps, with weekly Wednesday rebalancings.
The index will be built around a model developed by Whitford. Construction begins with the Solactive US Large Cap Index, which gives the 500 largest US companies. Whitford then uses the opening and closing prices of each stock to identify the “25 companies with a combination of the highest likelihood of appreciation over the next one-week period and the lowest volatility,” the prospectus says. Every Wednesday, Whitford chooses the 25 companies that will be included in the index through the following Tuesday. Each such company receives a weighting of 3.9%, and the remaining 2.5% remains uninvested.
Germany and Switzerland
UBS is bringing its SRI ETF into Germany and Switzerland, UBS ETF-MSCI World Socially Responsible UCITS ETF (SEAC, WSRUS)
PowerShares is cross-listing two fixed income ETFs into Switzerland. They are:
- PowerShares Euro Corporate Bond UCITS ETF (PFSE)
- PowerShares Emerging Markets USD Bond UCITS ETF (PEMD)