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Rise of the Machines: Why It’s Time to Invest in Robots

If you can’t beat them (and you can’t), invest in them. While Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk, perhaps the poster child for the advancement of tech and the use of automation in manufacturing, recently asserted that humans are undervalued, the reality is that nothing is going to stop the robotics revolution from sweeping across the globe, displacing millions of jobs both magnificent and mundane.

While that will prove a disaster for those being displaced and even those who aren’t, as competition for the fewer remaining jobs will intensify, it also promises to be a major boon for investors of robotics stocks like Intuitive Surgical, Inc. (NASDAQ:ISRG), Cognex Corporation (NASDAQ:CGNX), and iRobot Corporation (NASDAQ:IRBT).

Smarter Robots Pushing Into New Domains: While we’ve known robots were coming for us (well, for our jobs at least, though many believe they’ll eventually set their sights on us as well) and automation in the workplace isn’t exactly new, having been around for decades, the development of advanced AI and more dexterous machinery is allowing robotic arms and metallic hands to horde in on human positions in rapidly growing numbers.

Pixabay/Public Domain

Pixabay/Public Domain

It’s estimated by McKinsey & Company that as many 800 million jobs globally could be taken over by robots within a dozen years, a staggering figure that will decimate human employment within several industries. The hardest hit industry by 2030 is expected to be transportation, in which over 50% of jobs could be lost to driverless vehicles. Over 40% of existing manufacturing jobs and 40% of construction jobs are also under threat, while 20% or more of the jobs in admin, retail, finance, and numerous other industries are expected to go the way of the robot.

According to the International Federation of Robotics, sales of robots rose by 16% in 2016, and similar annual growth is expected throughout the remainder of this decade, and there’s no reason to suspect that growth will do anything but intensify in the 2020’s.

Robotics ETF a Massive Hit: Investors are paying attention to the coming workforce takeover, as the Global X Robotics & Artificial Intelligence ETF (BOTZ) took in over $650 million in investor capital in January alone, a massive amount for a thematic ETF. That ETF surged by 40% in 2017 but is relatively flat thus far in 2018. AI-based ETFs have also proven to be among the most popular thematic ETFs as investors seek to ensure they don’t miss out on the growth surges in these industries.

In addition to actively monitoring the ETF space, we’ve also developed a market-beating investment strategy of our own that has outperformed the S&P 500 by nearly 25 percentage points since its May 2014 inception. Insider Monkey’s flagship “Best Performing Hedge Funds Strategy” invests in the consensus picks of the top 100 best performing hedge funds every quarter. This strategy gained 4% last quarter vs. a loss of 1% for the S&P 500 ETF (SPY) and has returned 74.4% since inception vs. 49.7% for the SPY. You can see our latest picks by trying our newsletters free of charge for 14 days.

On the next page we’ll look at three stocks leading the robotics revolution.

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