In October, the ROBO Global Robotics & Automation Index celebrated its 10th anniversary. To celebrate this accomplishment, VettaFi CMO Jon Fee sat down with Zeno Mercer, a senior research analyst at VettaFi, for a special edition episode of “What Makes That Ticker Tick” to discuss the ROBO index at large.
Special Edition Episode for ROBO’s 10th Anniversary
Jon Fee: Welcome back to What Makes That Ticker Tick. Today is all about the ROBO Global Robotics and Automation Index. The ticker is R-O-B-O. I’m joined by none other than Zeno Mercer, senior research analyst here at VettaFi, someone who knows the ROBO ticker like the back of his hand. Zeno, this is a special show, because we’re also celebrating the 10-year anniversary of the index, quite the milestone for any index. I’ve got one question for you to start: What was the premise of ROBO then versus now?
ROBO’s Initial Premise
Zeno Mercer: So the premise 10 years ago when the index was created was that no one had mapped out robotics, let alone the robotic subsectors that comprise the universal robotics. It basically just looked at the subset of manufacturing and industrial automation. No one had taken a chance to break it down, let alone create an index out of it, even though robotics had been deployed in Japan going back to 1967. That was the premise then, that 10 years ago, this needed to happen, and a bunch of industry experts and many of our existing strategic advisors gathered and decided this should be a thing. Sure enough, 10 years later, here we are.
Jon Fee: I feel like this is going to be an episode that’s one part science fiction, one part indexing. Today, when you look at the index, it really follows this kind of duality and classification. On one side, you see the enabling technologies, those that are representing the companies that are going into the robotics and automation. And then on the other side, you see technologies that fall under the classification of application. The enabling technologies — I was checking out the fact sheet earlier today — it’s 41% of the portfolio. Zeno, can you tell me about some of the companies that fall under technologies enabling robotics and automation?
Companies in the “Enabling Technologies” Section of the Portfolio
Zeno Mercer: Referencing the screen we just had up, within the enabling technologies, these are core components that enable robots to exist. You’ve got actuation, which is effectively the movement and motion and controls of robotics. You have sensing, which is how they process and interact with the world. Are there computer vision and other enabling technologies they’re sensing?
Then you also have, for example, the compute and AI element, which is growingly top of mind for many people. This is how it connects and thinks and processes information, not just on its own device, but how it connects with the rest of the world. Huge and important elements, especially as we see robotics expand out of manufacturing and warehouse automation into more real-world, outside-the-box elements there.
We’ve definitely seen over the years more and more companies come into the fray, LIDAR wasn’t really as much of a thing. So we’re constantly monitoring and tracking these enabling technologies and how they impact the world and specifically play through and pull through into the demand drivers of robotics.
Some of the Logistics Companies Within the Index
Jon Fee: And those companies are supporting those on the other side of the portfolio, which makes up the remainder of it. And that side’s pretty interesting too, because you see a lot of everyday topics in their food and agriculture, healthcare, manufacturing. within the application side of the index, 14% of the index is in logistics automation. What are some of those companies, and how have you seen those companies evolve over the last 10 years?
Zeno Mercer: We’ve seen growing importance of logistics automation. Effectively, we saw even during COVID, lots of supply chain elements and disruption due to not having labor there and missing links. And we see companies like Symbotic help bring in millions of SKUs in the Walmarts using process automation in these very autonomous warehouse areas. They’re going into basically every single regional Walmart distribution center in the U.S. It’s actually outperforming Nvidia this year. But you also see other players like Zebra Technologies, you see Toyota Industries and Manhattan Associates, and many other players that work along the stack across a number of different industries globally.
Manufacturing and Industrial Automation Company’s Evolution
Jon Fee: Also in that part of the portfolio, 17% of the index is in manufacturing and industrial automation. Tell us about that segment of companies and how it’s evolved 10 years ago from when the index first started versus today.
Zeno Mercer: I guess I’d highlight that part of the origin story of ROBO goes back to what is now known as Amazon Robotics. One of the co-founders was involved there. And now Amazon has 750,000 robots deployed. That was a number they recently put out. Another member, FANUC, recently celebrated its millionth robot milestone. These are robots being used for everything, such as cars and iPhones. Basically, anything that you enjoy from a technical angle, these robots have massive elements and components of. The world really runs on robotics now, even though most of them operate behind the scenes in manufacturing. Of course, that’s still one of the biggest components in areas of robotics. Whether that’s the same 10 years from now will be decided over what happens over the next 10 years.
The Driverless Car Movement
Jon Fee: One million, it’s incredible. Zeno, I know you’re out in the VettaFi East studio there in New York City. I’m in the VettaFi West studio here just outside of San Francisco. I recently read that there’s almost 100 driverless cars now in San Francisco, picking people up, taking them to their destination. What are your thoughts on that movement? And where would those companies fall into the categories that we have within the ROBO index?
Zeno Mercer: We’re seeing autonomous vehicles start to get deployed in more than just SF. They’re all over the U.S now. Basically, in principle, they’re getting deployed in Texas, and Tennessee, and many other spots. Not only just for intercity but also across longer haul distances, also Japan, China, rest of the world. It’s a very interesting point you bring up. Because autonomous electric vehicles or just autonomous vehicles are made by robots. Their components are bots, and they themselves are a form of a robot.
Deployment of Robotics in Autonomous Vehicle Production
They have sensors, they have batteries. In many ways, they’re just a mobile robot. You actually see lots of parallels with the concept known as autonomous mobile robots that are used in warehouses to move goods across the floor. But increasingly, it requires elements from almost every technological advance we’ve had over the last, I guess, humanity, where it needs robust energy and connectivity and autonomy and decision making. A lot of this is trained on the back end with understanding of physics engines and societal rules.
And we’re really having a chance to reinvent and improve that. So you’ve got robotics being used to make these and they’re implemented inside of it and they are robots. So it’s a great example of a very early stage in the grand scheme of things of deployment of robotics.
Expectations for the ROBO Index in the Next 10 Years
Jon Fee: Like I said, the show is filling one part science fiction. You’re absolutely right. So many of the cars that people are driving are made by robots. And now you’re seeing in so many cities across the U.S. robots driving the cars or automation driving the cars. It’s phenomenal. Zeno, thank you for coming back on to What Makes That Ticker Tick. It was all about ROBO, the ROBO Global Robotics and Automation Index. I know you don’t have a crystal ball, but we’re celebrating the 10-year anniversary today of the index. What do you think is on the horizon for the next 10 years for this index?
Zeno Mercer: I would say a lot of people are seriously looking at artificial intelligence and its impact on society. I don’t think a lot of people have taken that second degree of order of what happens to robotics when we improve energy efficiency, both the input and output. We’re improving their training. You don’t just train a single robot. You can train entire fleets.
Impact of Generative Artificial Intelligence
You can push an update out. So what we’re seeing is the impact of generative AI. I don’t think it’s been fully appreciated how much it will impact the utility and benefit of robots. This includes the form factors and the value that we see. I really think we’ll see robots increasingly used in the traditional sense. I also think we’ll see them more deployed in other form factors such as multimodal logistics with cars and drones and other form factors, providing better utility, better bang for the bot, if you will.
Jon Fee: It sounds like an incredible, interesting space to watch, especially when you think about the underlying enabling technologies supporting robotics and automation.
Zeno Mercer: Absolutely. The increasingly addressable markets that these technologies are providing obviously get pulled through as part of the demand curve as it shifts forward.
Jon Fee: Very cool. Zeno, thank you again for joining us on What Makes That Ticker Tick. I’m going to have you back on in another month or so. I love learning more about robotics and automation. Thank you again.
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