Horizons Robotics and Automation Index (symbol: ROBO) opened for trading today on the Toronto Stock Exchange. The exchange-traded fund seeks to replicate before fees the performance of the ROBO Global Robotics and Automation Index, while hedging its U.S.-currency exposure. The management fee is 0.75%, not including operating expenses.
The reference index, which has more than 80 constituents, is designed to provide exposure to the performance of equity securities of robotics-related and/or automation-related companies. It was created by ROBO Global LLC, which is based in Dallas and London, England.
In August 2013, ROBO Global launched the U.S.-listed ROBO Global Robotics and Automation Index (ROBO). It has the same trading symbol as the TSX-listed ETF sponsored by Horizons ETFs Management (Canada) Inc., which will invest directly in the index stocks. The U.S. ETF, with assets of $US1.9 billion, has a five-year annualized return to Oct. 31 of 16% in U.S.-dollar terms. In a recent interview with Morningstar, Horizons President Steve Hawkins said ROBO has been the largest asset-gathering index-type strategy in the world this year.
Companies that are eligible for inclusion in the ROBO Global index include those that are providers of innovative technologies, services or devices. The index is rebalanced quarterly. ROBO Global expects that normally at least 40% of the index components will be securities of non-U.S. issuers, including a significant number of Japanese companies.
In fact, the Horizons ETF''s top three current holdings are Japanese, led by Yaskawa Electric Corp. (YASKY), whose products include industrial robots. The two others are Tokyo-listed Harmonic Drive Systems Inc., a robotics maker, and Fanuc Corp. (FANUY), a provider of factory automation and robots.
Rounding out the current top five holdings are two U.S. companies: IPGP Photonics Corp. (IPGP), a developer and manufacturer of advanced laser technologies, and Cognex Corp. (CGNX), a provider of machine-vision products.
As is appropriate for obtaining exposure to emerging industries, the index criteria for market capitalization and trading liquidity are lenient. To be eligible for inclusion in the index, stocks must have a market capitalization exceeding $200 million at the time of inclusion, and a minimum three-month average daily trading volume of $1 million.
