Automation

Investing in automation and robotics – How are companies capitalising on robotics and what does this mean for investors?

What is Automation?

Automation is the creation and application of technologies to improve or optimise processes. Automation began life on the factory floor, with automotive  companies aiming to improve manufacturing techniques, but has since evolved to influence multiple aspects of how we live and work.

What are the potential benefits of investing in Automation?

Automation can help companies:

  • Increase efficiency and lower costs
  • Improve reliability and consistency
  • Perform highly sophisticated and delicate tasks
  • Work safely alongside human workers
  • Keep pace with customers’ increasingly on-demand preferences

While we are still in the early stages of this disruptive trend, its long-term potential seems evident to a growing number of equity investors. And with an opportunity set across both larger and smaller companies, robotics is increasingly being recognised as a viable investment and potentially superior growth area. 

The warehouse automation market is expected to grow at circa 10% p.a. in the coming years.
Source: BofA Merrill Lynch - Fancy forklifts, smart warehouses (July 2018)

To help investors tap into the multi-decade investment potential of automation, our Robotech strategy focusses on the investable area of the robotics market. This includes:

  • Industrial Automation: Technologies helping companies increase precision, reliability and efficiency across industries.
  • Transport: Technological advances focusing on vehicle safety and the pathway towards autonomous vehicles. Additional opportunities outside of the car industry in areas such as agriculture and mining.
  • Healthcare: Companies involved in robotic surgery, assistance and remote healthcare.
  • Technology Enablers: The intelligence that powers and controls robotics. This provides the sensors, connectivity and intelligence used to gather and analyse information

Why invest in automation now?

The demand for industrial robots has accelerated in recent years due to the ongoing trend towards automation and innovative technological advancements. Advances in technology have made robots capable of performing highly sophisticated and delicate work as well as working alongside humans to drive productivity and efficiency.

We believe this is just the beginning of a multi-decade theme:

Worldwide annual supply of industrial robots

*Forecast. Source: AXA IM.  Chart: IFR World Robotics 2018.  Performance results of the past are not a reliable indicator for any future returns or trends. The growth of the global robotics market is not a reliable indicator of performance of the securities/companies which will be selected.

Robotics and automation technologies are also being applied more extensively across more industries than ever. In 2018, shipments of robots increased to every industry outside of the automotive industry:

+60% - To food and consumer goods companies
+50% - To semiconductor and electronics plants
+13% - To metals producers

Source: Association for Advancing Automation, via World Economic Forum, March 2019.

Robots are also becoming more affordable while labour cost is increasing and the working population is shrinking in many countries.

Labour cost vs robot prices

 

 

All investment involves risk and capital is not guaranteed. Such investment strategies are invested in financial markets and use techniques and instruments which are subject to some levels of variations, which may result in gains or losses. Additional risks may include Counterparty Risk; Credit Risk; or risks associated with the impact of any techniques such as derivatives or leverage.

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This page is for advertising and informational purposes only and does not constitute an offer to buy or sell any investments or products on the part of AXA Investment Managers or its affiliated companies and should not be considered a solicitation or investment, legal or tax advice. The strategies and/or products discussed herein may not be available in all jurisdictions and/or to certain types of investors. Opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee that forecasts made will come to pass. No guarantee, warranty or representation is given as to the accuracy or completeness of this material. Reliance upon information in this material is at the sole discretion of the reader. This material does not contain sufficient information to support an investment decision. Further important information as well as information regarding the representative and the paying agent of the respective fund are available under important information.