Sarah Hare, Senior Marketing Manager, BetaShares

The deployment of robotics and AI has been accelerated by the COVID-19 pandemic.

In the wake of the crisis, factories have never faced such an urgent need to replace humans with machines to keep production lines running.

Even before the pandemic, e-commerce retailers were under increased pressure to satisfy the growing demands of consumers. Since the pandemic took hold, demand has soared, and in response, retailers such as Amazon and Walmart have increased the use of robots in their warehouses .

Robots have also emerged as an ally on the healthcare front line, being used to take patients’ temperatures, disinfect hospital corridors and to help healthcare workers manage routine tasks so they can spend more time with patients.

AI potentially has the ability to speed up the development of vaccines and treatment drugs. It can also assist in detecting future outbreaks, due to the ability of AI algorithms to sift through massive amounts of data and potentially recognise anomalies before outbreaks reach pandemic status.

(Editor’s note: Do not read the following ideas as ETF recommendations. Do further research of your own or talk to a licensed financial adviser before acting on themes in this article).

BetaShares offers the Global Robotics and Artificial Intelligence ETF (ASX:RBTZ), which aims to track the Indxx Global Robotics & Artificial Intelligence Thematic Index (before fees and expenses). 

RBTZ currently holds 31 companies that potentially stand to benefit from increased adoption and utilisation of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles.

Over the year to 30 October 2020, the index RBTZ aims to track returned 31%, while over the three and five years to 30 October 2020, the index RBTZ aims to track returned 9.8% and 18.0% per annum respectively, according to BetaShares data.

Note that the return volatility for RBTZ can be expected to be greater than that of the broader global sharemarket, and RBTZ should only be considered as a component of a broader portfolio.

Arian Neiron, Managing Director, VanEck Asia Pacific

In terms of where we game, the mobile games revenue is the biggest, followed by consoles.

The number of people gaming and tuning into eSports is overwhelming. At end-October 2020, there were an estimated 2.8 billion people gaming, compared to around 2.74 billion Facebook subscribers at 30 September 2020 and 195 million Netflix subscribers.

The video-game business is now larger than the movie and music industries combined, making it a major industry in entertainment.  

The largest-grossing movie of all time, Avengers: Endgame, raked in over US$858 million during its opening weekend in April 2019. This easily underperforms the highest-grossing entertainment launch in history, Grand Theft Auto V, which earned US$1 billion in just three days when it was released years earlier in 2013.  

In 2019, eSports drew a larger global audience with 443 million global viewers. That was more than American football and international rugby union combined, at 410 million viewers. 

Australian investors now can “enter the game”. The VanEck Vectors™ Video Gaming and eSports ETF (ASX:ESPO) is an Australian first, offering the opportunity to invest in the largest pure-play global video-gaming companies that generate at least 50% of their revenue from video gaming and/or eSports. 

ESPO’s holdings include leading game publishers Tencent, Nintendo, Electronic Arts and Activision Blizzard, which are growing at rapid rates. 

ESPO provides one-trade access to 25 global video-gaming and eSports companies. Importantly, the ETF enables technology diversification away from big technology companies Apple, Amazon, Google and Microsoft. Investors can use ESPO to express a view on the gaming and eSports sector and potentially reap the rewards it offers.

Kanish Chugh, Head of Distribution, ETF Securities

The rapid movement towards high-tech lifestyles is fuelling continued and increasing demand for the systems and applications to support this activity, supplied by companies such as those making computer equipment, data-storage products, networking products, semiconductors and components. 

While Australian technology is an interesting and growing space, Australian investors tend to be underexposed as a whole to this sector and many investors assume their exposure is covered by companies with a technology association. 

Many of these companies don’t necessarily generate their revenue from sales or licensing of technology, meaning investors are missing a core part of the supply chain.

ETFS Morningstar Global Technology ETF (ASX:TECH) offers exposure to global tech companies encompassing hardware, software and IT services. 

It aims to track the performance of the Morningstar Developed Markets Technology Moat Focus Index, which comprises 25-50 companies identified in this space as possessing strong competitive advantages relative to their peers, with attractive valuations based on research by Morningstar’s equity analysts.

There are specific risks to investing in technology, including through an ETF like TECH. It can be a volatile sector at times and companies can be susceptible to rapid changes in technology, regulation and competition. 

TECH includes micro, small, mid and large-capitalisation companies. Smaller companies tend to be more vulnerable to market cycles and price fluctuations. 

Investing in global shares, including via TECH, can also expose investors to variations in exchange rates between the Australian dollar and international currencies.