ETF Battles: ROBO vs. BOTZ – A Face-off Between Automation ETFs
- BOTZ and ROBO go against each other in key areas, including diversification, exposure strategy and a mystery category
- Both thematic ETFs track stocks in artificial intelligence, automation and robotics
- Both funds are head-to-head rivals in a heated fight for assets
Ron: You don’t have to be a sci-fi fan, to recognize that robotics, automation and artificial intelligence are penetrating nearly all aspects of business and life. It’s everywhere! The question is what’s the best way to profit from this trend? Welcome to ETF Battles, I’m Ron Delegge, and boy, have we got a great matchup for you today.
It’s a showdown between two robotics, AI focused ETFs, we’ve got the ROBO Global Robotic and Automation ETF, that’s ticker symbol, ROBO, versus the Global X Robotics and Artificial Intelligence ETF, also known as BOTZ. By the time this battle is completed, we’re all gonna be drenched with an oversupply of androids and algorithms, but who’s complaining?
Before we go any further, let me just tell you why I like ETF Battles, besides the predictable antics. Because this program teaches you to ask questions, and to have a process before you invest. So even if you disagree with the final battle outcomes, the process of identifying and screening investment opportunities still stays with you. And someday, if I, or anyone else, or maybe even your twin alter ego, challenges you about a certain investment choice you’ve made, hopefully you’ll be able to defend that investment choice confidently, because you have a process.
So we’ve got four battle categories, which are cost, diversification, exposure strategy, and performance. We’re gonna go through each one of them, one at a time, and at the end of the program, we’re gonna declare a final overall ETF Battle winner. So, my scorecard is ready, as you can see there it’s blank. We’ve got our shot clock, which is also ready. And so, we’re gonna begin with Dave, and we’re gonna start with cost. You got 30 seconds go .
Dave: The cost on ROBO, is 0.95%, and for BOTZ, it’s 0.68%. So, it’s an easy cost savings, the win on cost goes to BOTZ.
Ron: All right, Mike, what’s your take?
Mike: Not so fast my friends. When you look at costs on Thematic ETFs, it really comes down to, does it capture what you want? So, absolutely, from a total cost or an actual expense ratio perspective, there’s a healthy difference there in ETF land, but when it comes to actually investing in strategies, the end of the day, what matters most, is security selection and BOTZ, which charges 68 basis points, has 36 securities, that dominates its market cap weighted. So, it owns the largest of those companies. So for example, NVIDIA and Keyence, make up over 20% of the portfolio, whereas ROBO, has 87 securities, pushes much further into small mid-cap names that you wouldn’t find in your core positionings of your portfolios. Obviously, it does it at a 95 basis point expense ratio, but from a total package perspective, actually gets you a peer play into the space, so I’m gonna give the nod to ROBO.
Ron: Okay, our next battle category is diversification. Mike who wins the battle?
Mike: So just following up with the comments I just made from a diversification standpoint, with BOTZ, you’re looking at 36 names and you have 65% of your portfolio, in the top 10 names. So really you’re buying 10 stocks, and then what’s left over with ROBO, you’re getting 87 stocks, and the tier to equal weight manner. So, from a diversification standpoint, it’s a no brainer, you’re getting more exposure to mid-cap, small-cap names, and you’re getting a more diversified exposure to all kinds of different companies, participating in the robotics and AI Space, clear winner for me is ROBO.
Ron: Dave, your analysis on diversification, who wins the battle?
Dave: I agree with Mike, ROBO, is clearly more diversified, BOTZ, does have the extra Japan exposure, and I do like the extra exposure to NVIDIA, but BOTZ is more concentrated, so, ROBO wins the diversification.
Ron: Okay, the next battle category is exposure strategy. Dave, tell us your thoughts.
Dave: These are both robotics, and AI ETFs. So, the performance is gonna be the much bigger metric here. So for strateg, I’ll call it a tie, split decision.
Ron: Okay, split decision. I hate split decisions! I always like to see someone get beat up. Okay, what’s your take Mike, on this particular category exposure strategy?
Watch the full episode of #ETFBattles between ROBO vs. BOTZ at ETFguide TV.