ROBO and BOTZ

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Yankuba
Posts: 60
Joined: Wed Dec 07, 2016 10:45 am

ROBO and BOTZ

Post by Yankuba » Sat Dec 23, 2017 1:58 pm

I am a big believer that robots and software will eat humans’ lunch. What are your thoughts on these two robotics and automation ETFs?

ROBO
BOTZ

I know I already own the American companies in these ETFs via my index funds but a good chunk of these ETFs are foreign and my foreign exposure is low.

Thank you

software
Posts: 77
Joined: Tue Apr 18, 2017 2:02 pm

Re: ROBO and BOTZ

Post by software » Sat Dec 23, 2017 2:03 pm

By investing in sector funds you are taking diversifiable risk which generally does not increase your risk adjusted return. Whether or not that targeted bet will pay off long term is anyone’s guess.

If it was me and I wanted more foreign exposure, I’d rather invest in a broad market foreign ETF like VXUS.

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arcticpineapplecorp.
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Re: ROBO and BOTZ

Post by arcticpineapplecorp. » Sat Dec 23, 2017 2:15 pm

maybe you missed some of the earlier posts? Always good to do a search before posting. Your question may have already been asked/discussed. Read more here:

viewtopic.php?f=1&t=232724
https://www.google.com/search?sitesearc ... org&q=botz

regarding BOTZ, here's what I wrote before (viewtopic.php?t=232724#p3626854):
holds just 29 stocks. That doesn't sound like enough diversification for me, but to each his/her own. In fact the prospectus classifies this as carrying "non-diversified risk" under the investment company act of 1940. Did you read the prospectus? It's interesting. There's a very long list of risks, and they're nicely alphabetized from "asset class risk" to "valuation risk". 29 risks in all. Too risky for me. Definitely read the prospectus:

https://www.globalxfunds.com/content/fi ... pectus.pdf

I also don't pay a 0.68% expense ratio for any fund I own, but to each his/her own. How thinly traded is this ETF? Something to consider. The spread could be expensive. Do you know how much you're paying in the spread?

The one good thing is it seems to be a passively managed fund. The bad news is it invests "at least 80% of its assets in the securities of the underlying index." (page 7 of prospectus). Where's the other 20% going?

Finally, it's inception date was just 9/12/16 (source: https://www.google.com/search?q=botz+et ... fox-b-1-ab). I like funds with longer track records than that. But that's just me. I know it's a small portion of your portfolio, so there's no real harm. But then is there any real benefit either?

Image
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

Yankuba
Posts: 60
Joined: Wed Dec 07, 2016 10:45 am

Re: ROBO and BOTZ

Post by Yankuba » Sat Dec 23, 2017 2:19 pm

arcticpineapplecorp. wrote:
Sat Dec 23, 2017 2:15 pm
maybe you missed some of the earlier posts? Always good to do a search before posting. Your question may have already been asked/discussed. Read more here:

viewtopic.php?f=1&t=232724
https://www.google.com/search?sitesearc ... org&q=botz

regarding BOTZ, here's what I wrote before (viewtopic.php?t=232724#p3626854):
holds just 29 stocks. That doesn't sound like enough diversification for me, but to each his/her own. In fact the prospectus classifies this as carrying "non-diversified risk" under the investment company act of 1940. Did you read the prospectus? It's interesting. There's a very long list of risks, and they're nicely alphabetized from "asset class risk" to "valuation risk". 29 risks in all. Too risky for me. Definitely read the prospectus:

https://www.globalxfunds.com/content/fi ... pectus.pdf

I also don't pay a 0.68% expense ratio for any fund I own, but to each his/her own. How thinly traded is this ETF? Something to consider. The spread could be expensive. Do you know how much you're paying in the spread?

The one good thing is it seems to be a passively managed fund. The bad news is it invests "at least 80% of its assets in the securities of the underlying index." (page 7 of prospectus). Where's the other 20% going?

Finally, it's inception date was just 9/12/16 (source: https://www.google.com/search?q=botz+et ... fox-b-1-ab). I like funds with longer track records than that. But that's just me. I know it's a small portion of your portfolio, so there's no real harm. But then is there any real benefit either?

Image
Thank you - I will review the old posts

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nisiprius
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Re: ROBO and BOTZ

Post by nisiprius » Sat Dec 23, 2017 5:12 pm

I think this should be mentioned: one of Larry Swedroe's, "Rules of Prudent Investing"
In 'The Quest for Alpha,' p. 156, Larry Swedroe wrote:#17: Owning individual stocks and sector funds is more akin to speculating, not investing. The market compensates investors for risks that cannot be diversified away, like the risk of investing in stocks versus bonds. Investors shouldn't expect compensation for diversifiable risk--the unique risks related to owning one stock or sector or country fund. Prudent investors only accept risk for which they will be compensated with higher expected returns.
We can set up a 1-5 scale with the more Bogleheadish listed first:

1) Cap-weighted total market index funds

2) Portfolios that include total markets but are not cap-weighted, with mild departures: fundamental indexing, smart beta, small value tilts, slice-and-dice, factor-based investing, overweighting emerging markets, and going a-fooling with the gods of the strangers (commodities, peer-to-peer lending, phragmites, etc.)

3) Sector funds tied to the GICS sectors (the eleven big so-called "headline" sectors): energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, telecommunications, utilities, real estate.

4) Funds tied to narrower GICS categories (industry groups, industries, sub-industries)

5) Individual stocks of single companies

I don't see "robotics" or "automation" mentioned in Wikipedia's article in the GICS, so I think it is even narrower than a "sub-industry." So it is only slightly less speculative than investing in a single company.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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