Pictet Robotics, AXA Framlington Global Technology and Goldman Sachs Global Core Equity portfolio are three active options for investors looking to narrow their technology exposure to the artificial intelligence (AI) and robotics sectors, according to The Share Centre’s Sheridan Admans. 
The theme of technology is well known, with the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) all making extraordinary returns for investors.
Indeed, the S&P 500 Technology index has returned 209.87 per cent over the last five years while the broader S&P 500 index has paid out 138.36 per cent, as the below chart shows.
Performance of indices over 5yrs
Source: FE Analytics
But with some concerns over the valuations of the mega-cap technology names, investors are increasingly looking to new, more specialised areas of the market.
Two such areas that are gaining particular traction are AI and robotics.
“Robots are playing an ever larger role in our daily lives. Scientists and engineers have made significant strides from the dumb bots, those that have been very effective undertaking precise, repetitive work, such as those used extensively in the car industry,” Admans ([ictured) said.
On the AI side, systems are becoming more entrenched in daily life with driverless car technology – once as in the realm of science fiction – becoming somewhat of a posterchild for the ongoing tech revolution.
“AI, often depicted in fiction as taking on a human form, today manifests itself as search algorithms such as those used by Google, news generation often referred to as ‘news bots’, medical diagnoses and minimally invasive prostatectomies to cybersecurity and autonomous weapons systems,” the investment manager said.
Together, algorithms and the processing of big data are helping robots make more sense of the world/environment they operate in, which has in turn led to more advanced robots which are more autonomous, able to respond more effectively and adapt to complex tasks and situations, he added.
Below, Admans looks at three active funds and two passive vehicles that investors should consider if wanting to access this fast-growing phenomenon in a more targeted way.
The first is the $6bn Pictet Robotics, run by Peter Lingen and John Gladwyn, which invests mainly in securities of companies that contribute to and/or profit from the value chain in robotics and enabling technologies.
“The managers favour companies operating in areas such as robotics applications and components, automation, autonomous systems, sensors, microcontrollers, 3D printing, data processing, actuation technology, as well as image, motion or voice recognition and other enabling technologies and software, giving investors a broad range of opportunities,” Admans said.
Since its launch in October 2015, the fund has returned 90.11 per cent, 20.49 percentage points ahead of the IA Technology & Telecommunications sector and 41.21 percentage points ahead of the MSCI World, as the below shows.
Performance of indices over 5yrs
Source: FE Analytics
The fund is 53.7 per cent weighted to the US with 18.9 per cent in Japan, with 41.1 per cent in enabling technologies and 38.4 per cent in industrial automation such as electric and driverless cars.
Pictet Robotics has a clean ongoing charges figure (OCF) of 1.2 per cent.
Part of The Share Centre’s preferred range of funds, the AXA Framlington Global Technology fund is another option for investors.
“From cars to healthcare, communication to banking and manufacturing, this fund provides investors access to companies where the business is focused on end user applications such as Google, Facebook, Apple and Cisco Systems,” Admans said.
A broader offering than the Pictet peer above, the three crown-rated fund run by Jeremy Gleeson has been a top quartile performer in the IA Technology & Telecommunications sector over three and 10 years and is in the second quartile over one and five-year periods.
The £446m fund includes Alphabet – the parent company of Google – Apple, Facebook, Visa and Cisco Systems as its top five holdings, making up 34.41 per cent of the portfolio.
In its latest factsheet, the manager said expectations for the remainder of 2017 look robust with growth expected to continue into 2018.
“We remain positive on our investments and the themes behind those investments such as Web 2.0, enterprise productivity and digitalisation,” he said.
The fund has an OCF of 0.83 per cent.
The final active fund for investors to consider, according to Admans, is the five crown-rated Goldman Sachs Global Core Equity Portfolio – which applies AI to its investment process.
The investment manager said: “The fund seeks an edge over its global investing peers by mining through vast amounts of data on a daily basis using algorithms and data analytical tools to help in the portfolio’s construction.
“This fund is an example of a fund manager using big data to outperform more traditional human-only fund managers.”
Performance of indices over 10yrs
Source: FE Analytics
Over the last decade the $3.9bn fund has made top quartile returns of 169.77 per cent, beating the MSCI World index and IA Global sector by 20.23 and 59.18 percentage points respectively.
Analysts at FE Invest added: “This is the only fund we have met offering exposure to machine-learning techniques, using images provided by satellite and so on.”
The fund has an OCF of 0.66 per cent.
From a passive perspective, Admans said investors could consider the $1.1bn iShares Automation & Robotics ETF.
“It seeks to track the performance of an index composed of developed and emerging market companies which are generating significant revenues from specific sectors associated with the development of autonomous and robotic technology,” he noted.
“Another suitable option could be the $849m ETFS ROBO Global Robotics and Automation which tracks the performance of the ROBO Global Robotics and Automation UCITS Index,” the investment manager added.
Both fund have performed strongly over the past year, returning 44.46 per cent and 41.52 per cent respectively. They have OCFs of 0.4 and 0.8 per cent.