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ETF Battles: BOTZ vs. ROBO - Which ETF is Better for Artificial Intelligence and Robotics Stocks? - YouTube
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- You don't have to be a sci-fi fan, to recognize
that robotics, automation and artificial intelligence
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are penetrating nearly all aspects of business
and life.
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It's everywhere!
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The question is what's the best way to profit
from this trend?
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Welcome to ETF Battles, I'm Ron Delegge, and
boy, have we got a great matchup for you today.
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It's a showdown between two robotics, AI focused
ETFs, we've got the ROBO Global Robotic and
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Automation ETF, that's ticker symbol, ROBO,
versus the Global X Robotics and Artificial
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Intelligence ETF, also known as BOTZ.
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By the time this battle is completed, we're
all gonna be drenched with an oversupply of
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androids and algorithms, but who's complaining?
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Before we go any further, let me just tell
you why I like ETF Battles, besides the predictable
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antics.
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Because this program teaches you to ask questions,
and to have a process before you invest.
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So even if you disagree with the final battle
outcomes, the process of identifying and screening
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investment opportunities still stays with
you.
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And someday, if I, or anyone else, or maybe
even your twin alter ego, challenges you about
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a certain investment choice you've made, hopefully
you'll be able to defend that investment choice
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confidently, because you have a process.
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Helping us to judge today's match up is Mike
Akins, CEO at ETF Action, and Dave Kreinces,
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with ETF Portfolio Management.
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Judges, welcome back to the show.
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- Thanks Ron.
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- Thanks Ron.
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- So we've got four battle categories, which
are cost, diversification, exposure strategy,
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and performance.
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We're gonna go through each one of them, one
at a time, and at the end of the program,
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we're gonna declare a final overall ETF Battle
winner.
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So, my scorecard is ready, as you can see
there it's blank.
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We've got our shot clock, which is also ready.
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And so, we're gonna begin with Dave, and we're
gonna start with cost.
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You got 30 seconds go .
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- Ron, the cost on ROBO, is 0.95%, and for
BOTZ, it's 0.68%.
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So, it's an easy cost savings, the win on
cost goes to BOTZ.
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- All right, Mike, what's your take?
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Not so fast my friends.
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- Are out.
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- When you look at costs on Thematic ETFs,
it really comes down to, does it capture what
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you want?
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So, absolutely, from a total cost or an actual
expense ratio perspective, there's a healthy
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difference there in ETF land, but when it
comes to actually investing in strategies,
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the end of the day, what matters most, is
security selection and BOTZ, which charges
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68 basis points, has 36 securities, that dominates
its market cap weighted.
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So, it owns the largest of those companies.
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So for example, NVIDIA and Keyence, make up
over 20% of the portfolio, whereas ROBO, has
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87 securities, pushes much further into small
mid-cap names that you wouldn't find in your
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core positionings of your portfolios.
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Obviously, it does it at a 95 basis point
expense ratio, but from a total package perspective,
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actually gets you a peer play into the space,
so I'm gonna give the nod to ROBO.
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- Okay, our next battle category is diversification.
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Mike who wins the battle?
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- So just following up with the comments I
just made from a diversification standpoint,
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with BOTZ, you're looking at 36 names and
you have 65% of your portfolio, in the top
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10 names.
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So really you're buying 10 stocks, and then
what's left over with ROBO, you're getting
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87 stocks, and the tier to equal weight manner.
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So, from a diversification standpoint, it's
a no brainer, you're getting more exposure
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to mid-cap, small-cap names, and you're getting
a more diversified exposure to all kinds of
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different companies, participating in the
robotics and AI Space, clear winner for me
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is ROBO.
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- Dave, your analysis on diversification,
who wins the battle?
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- I agree with Mike, ROBO, is clearly more
diversified, BOTZ, does have the extra Japan
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exposure, and I do like the extra exposure
to NVIDIA, but BOTZ is more concentrated,
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so, ROBO wins the diversification.
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- Okay, the next battle category is exposure
strategy.
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Dave, tell us your thoughts.
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- These are both robotics, and AI ETFs.
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So, the performance is gonna be the much bigger
metric here.
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So for strategy--
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- I hate when you say that.
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- I'll call it a tie, split decision.
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- Okay, split decision.
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I hate split decisions!
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I always like to see someone get beat up.
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Okay, what's your take Mike, on this particular
category exposure strategy?
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- Ron, this is a great example to talk a little
bit about why it's so important to look under
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the hood of an ETF.
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- Amen!
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- Both these ETFs robotics, one's artificial
intelligence, the other one's automation.
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So there's a little difference there, but
in general, they're claiming to capture the
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same companies, but if you break down the
portfolio, and I'm looking at this chart here,
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what you'll see is despite being 103 unique
companies between the two strategies, there's
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only two 20 names in common between the two
strategies, so it sheds light onto this idea,
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the arbitrary nature of the methodologies
that go into these portfolios, and the real
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importance of understanding what you're buying.
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So back to the exposure strategy concept,
I like NVIDIA, as Dave pointed out, I think
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it's a great company, I like semiconductors
in general, but about looking to get exposure
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to Global Robotics and Artificial Intelligence,
I think I wanna go into those companies that
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are getting pure revenue from that perspective,
I'm making an active call on that macro sense,
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and NVIDIA is gonna get a lot of its revenue
just from chips in general.
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So that perspective alone, from a capturing
the intent of the strategy, I'm gonna go with
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ROBO, on exposure and strategy.
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- Okay, our next category is performance.
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Mike, take it away.
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- Performance, despite these portfolios being
remarkably different, only having 20 names
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and 27%, which by the way, that is a big number,
and when you're dealing with equities in general,
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there's a high correlation.
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So once you start diversifying out, it's not
uncommon to get similar returns, but these
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two portfolios are right on top of each other
since common exception.
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I believe ROBO has a slight lead, but comes
with a little bit more volatility.
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I'm just gonna have to give it a coin flip,
other than the fact that ROBO, is capturing
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it with a pure play, so I'm gonna go ROBO
anyway.
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- So ROBO, is your performance winner for
this category.
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- Yeah.
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- Okay, very good, Dave, you're up!
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- Ron, it's rare that we split, but neither
of these two ETFs have been trading for 10
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years, so the data is limited, but again,
like Mike said, the performance is comparable,
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ROBO fared better in the crash of 18, it has
slightly better one to three year returns,
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but I'll give the performance win to BOTZ,
because I just love NVIDIA.
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So, I'm gonna go with BOTZ.
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- And because you're a contrarian, or disclosure.
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- Keeping interesting.
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- So lets now--
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- I'm not sure why NVIDIA, is a contrarian
play.
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I think that might be more of a momentum play,
but we can leave that for another battle.
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- Very good, so now, we've moved to the final
part of the program, where we're gonna let
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our judges give their overall recap and overall
winner, between these two ETFs, ROBO and BOTZ.
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Dave, you've got the microphone .
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- So Ron, for me, ROBO, one on diversification,
but BOTZ wins the battle.
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It's slightly better performance, the extra
NVIDIA, and overall, I just wanna say that
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both of these ETFs are interesting for technology
exposure, but I would still favor the NASDAQ-100,
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over both of these ETFs.
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NASDAQ-100 just passed a hundred billion in
assets, and the three times NASDAQ-100 TQQQ,
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which is unbelievable.
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We recently needed that ETF, the American
dream ETF, because it returns 43 times your
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money in its--
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- There you come again with unrelated ticker
symbols, I'm gonna have to put you in the
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penalty box.
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- But that's a story for another battle.
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- I'm gonna have to put you in the penalty
box for five seconds again, for disorderly
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enthusiasm.
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- But we are talking technology ETFs here.
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- Okay, very good.
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So, who's your overall battle winner between
BOTZ and ROBO?
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- Yeah, so I would asterisk that it's TQQQ,
but I'll give the battle win to BOTZ.
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- Okay, very good.
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Mike, what's your take?
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- So, it's interesting, I think one of the
things we say at ETF Action, is that ETFs
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are just tools, right?
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There's some of their parts, and how good
is the tool at getting the job done?
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And when I think about investing into Global
Robotics, or Artificial Intelligence, and
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trying to capture companies that are generating
the majority of their revenue from that theme,
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then I think clearly the better tool here,
is ROBO.
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That does not equate to the better investment,
that at the end of the day, you still gotta
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be bottom up analysis on the companies, and
see what you're buying, look at the macro
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environment, look at your valuations, understand
the fundamentals, and the quality of the balance
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sheets, all of that good stuff, and that's
what we do at ETF Action is provide tools
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to do that.
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But, thinking about it from a perspective
of, I wanna get exposure to this theme.
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These are both Thematic ETFs, I have to give
the nod to ROBO, simply because it is pushing
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into more companies, that are primarily related
to the robotics and AI Space.
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And it's doing so, in a waiting capacity that
gives you more exposure to those pure replay
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names.
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So overall winner, is going to be ROBO.
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- All right, well that does it for our judges,
they have weighed in.
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And so the question is, who is today's ETF
Battle winner?
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Well, according to my scorecard, this folks
is a split decision.
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It was a split decision on cost.
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The only category really that our judges agreed
on, was diversification, but everything else,
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in terms of the analysis, was exactly the
opposite.
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And so, that's sometimes what happens, with
ETF Battles, we have opposite views, opposite
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opinions, and sometimes it winds up that we've
gotta split decision.
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So that's what we had today.
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But again, put both of these ETFs on your
watch list, ROBO and BOTZ.
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I think we've given you some good stuff to
work with, and at the very least a starting
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point for further research, if you're looking
at investing, in automation, artificial intelligence,
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and robotics.
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Keep in mind, ETF Battles was made possible
by viewers like you.
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So please support us by subscribing to ETFguide
TV, our channel and spreading the word with
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your friends and with your colleagues.
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So which ETF Battles would you like to see
in our next episode?
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Post your thoughts on our YouTube comment
section, or hit us up on Twitter, #ETFBattles.
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I wanna thank Dave and Mike, our two guest
judges for doing a great job as always, in
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helping us to judge today's battle.
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And thanks again for watching ETFguide TV.
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I'm Ron Delegge, and until next time, watch
the battle before you invest!
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