Technology funds have enjoyed some of the strongest inflows on record in recent weeks, with Bank of America Merrill Lynch reporting 16-week flows into tech funds at a record high.
Over the last 12 months, flows into robotics ETFs and mutual funds have accelerated from an estimated $5.09bn to $8.95bn, the bank reports. According to iShares and Bloomberg data, assets in four robotics ETFs listed in Europe and the US grew from $415m at the end of 2016 to $1.08bn at 31 March 2017.
Investors are being attracted to the robotics sector as global awareness of this area of innovation grows, with searches for ‘Automation and Robotics’ more than doubling over the past five years, according to Google Trends.
It is not surprising, given the steady growth in the global supply of industrial robots over the last decade, up from 60,000 in 2009 to 254,000 last year, according to the IFR World Robotics Report 2016.
Robots are making it into the mainstream, with robot usage now becoming commonplace in everyday life. IFR’s report shows the number of domestic household robots worldwide is expected to increase to 31 million by 2019.
At the end of February, ETF Securities reported strong inflows into its ROBO Global Robotics and Automation GO UCITS and ITFS ISE Cyber Security GO UCITS ETFs in the first couple of months of the year.
At the end of last year, giant provider iShares also moved into the space with an Automation & Robotics UCITS ETF, which offers exposure to companies innovating across technologies, including manufacturing robots and wearable technology.
The chart below shows performance and cumulative flows of Technology stocks over the year to 12 April 2017, using TrackInsight’s own prorietary data.
Much of this demand for the sector has been driven by US President Donald Trump’s efforts to bring jobs back to the US by creating more favourable tax conditions for businesses, which is expected to boost appetite for factory tech, as well as addressing some cyber security issues which were highlighted during the election.
The US President has proposed a one-time tax of 10% on the repatriation of cash held offshore by US companies, well below the current rate of 35%, to encourage firms to move money and jobs back to the US, which is also expected to drive many tech giants back to home shores.
Some $2bn in total is said to be held offshore by US firms, with $1.3bn belonging to non-financial companies, and tech giants Apple, Google, Microsoft and others make up a large chunk of this.
Provided the promised tax incentives materialise, hundreds of billions of technology money could flow back into the US, driving further gains for the sector. However, as with all of Trump’s proposed policies, it remains to be seen whether the reality matches the promises made.
