Robots, artificial intelligence (AI) and highly advanced automation systems — not too long ago, this would sound like a lineup from a science fiction movie, but today there’s an entire ecosystem of industries built around these things. Productivity and use cases of these formerly bleeding-edge ideas and technologies has increased as time has passed. As adoption of robots, AI and automation continues to grow there certainly appears to be a unique opportunity for savvy traders to capitalize on.
Just in the industrial robotics sector, there has been significant growth with a total of more than 2.7 million robots operating worldwide as of 2020. Smart use and implementation of robotics apparently brought the infamously comfy shoe company Crocs (NASDAQ: CROX) significant success in 2020.
With all the things going on in these expanding industries, traders may be interested in getting in on the action, and there’s an exchange-traded fund (ETF) for it. For traders with a short-term bullish stance on these sectors, and who crave the risk incurred with using leverage, the UBOT Daily Robotics, Artificial Intelligence & Automation Index Bull 2X Shares ETF by Direxion is a daily bullish leveraged ETF based on the Indxx Global Robotics and Artificial Intelligence Thematic Index (IBOTZ).
The IBOTZ index is a thematic index that aims to track the performance of companies that we believe are expected to benefit from the increased adoption and use of robotics and AI. The near term still will likely have many movements and fluctuations, and some bearish traders may even want to look at the constituents of the IBOTZ index for candidates to short. However, the UBOT ETF’s goal is to provide bullish traders an opportunity to achieve 2 times the exposure for the value of the IBOTZ index on a daily basis.
Some of UBOT’s top holdings include companies in the robotics, AI and automation sectors, such as Nvidia (NASDAQ: NVDA), Abb (NYSE: ABB), Intuitive Surgical (NASDAQ: ISRG), Yaskawa Electric (OTCMKTS: YASKY) and John Bean Technologies (NYSE: JBT).
Will robots or AI take over the world like numerous movies suggest? Most likely (and hopefully) the answer is a solid no. However, robotics, AI and automation as products, services and industries are still relatively early in their market maturity and are quite likely to end up changing the world for the better.
Source: Bloomberg. Index sector weightings and top holdings are subject to change
Investing in a Direxion Shares ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The Direxion Shares ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged, or daily inverse leveraged, investment results and intend to actively monitor and manage their investment.
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Shares of the Direxion Fund are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.
Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular industry, sector, or geographic region which can result in increased volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Market Risk, Market Disruption Risk, Aggressive Investment Techniques Risk, Counterparty Risk, Intra-Day Investment Risk, Daily Index Correlation/Tracking Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the securities of the Robotics & Artificial Intelligence Companies, and the Industrials and Information Technology Sectors. Robotics and artificial intelligence companies may have limited product lines, markets, financial resources or personnel. These companies typically face intense competition and potentially rapid product obsolescence. Robotics and artificial intelligence companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.