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, as automotive companies aimed 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

Expected annual growth of the global robotics market until 20251

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. With an opportunity set across both larger and smaller companies, robotics is increasingly being recognised as a viable investment and potentially superior growth area of the market.

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Our Robotech strategy

Our Robotech strategy seeks to provide investors with access to the long-term superior growth potential of the robotics market, an expanding area of the economy with an increasing number of small and mid-cap investment opportunities. This includes:

  • Industrial automation: Technologies helping companies increase precision, reliability and efficiency across industries.
  • Transport: Technological advances focused 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 supply of industrial robots (units in thousands)

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Worldwide supply of industrial robots

Source: AXA IM / IFR World Robotics 2021

Robots are being used across more industries

As robots become smarter, more flexible and increasingly capable of working alongside humans, they are being used across more industries:

  • Alongside the automotive market, the semiconductor and electronics industry is the main user of industrial robots.
  • The food and beverage industry has been one of the fastest-growing areas in terms of robotic use over the past few years.
  • Robotic precision is also useful for repetitive or dangerous jobs, such as hazardous materials testing.

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

 

Risks considerations for this strategy

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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Access other evolving economy themes

To help people invest in the companies that are embracing these changes, we have adapted our internal research capabilities to incorporate the five main trends that we believe represent the future for long-term fundamental growth investing.

Evolving Economy

Ageing and lifestyle

The number of over-60s2 is expected to triple in size between 2000 and 2050, creating challenges for companies and individuals

Evolving Economy

Connected consumer

Only 18%3 of global retail sales are transacted online, which will likely increase as smartphone adoption rises globally

Evolving Economy

Clean Economy

Innovative companies are creating solutions to address pressures on scarce natural resources and the need for greenhouse gas emission reduction

Evolving Economy

Transitioning societies

The growth of the global middle class is at a 150-year high4, boosting consumption in Asia and the developing world

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