By Bill Studebaker, CIO & President, ROBO Global
For many investors who are struggling to adapt to this new market environment, April proved to be a month of prolonged discomfort. In times like these, I find it particularly useful to take a step back from the emotions and take a close look at where we’ve been, where we are now, and what most likely lies ahead.
Having worked in the financial services industry for over a quarter of a century, I still find it remarkable when I see the speed at which investor sentiment and narratives can shift in response to changes in the markets. After years of growth—even amid the ongoing pandemic—Omicron fears brought a new level of volatility to the final quarter of 2021, leaving many of us simply hoping to survive and come out in one piece. That sting was only exacerbated by the end-of-year index rally that caught under-exposed investors by surprise. Fast forward to today when, after a tumultuous start to the year for equities, the optimists who were hoping for a fresh start in 2022 now find themselves asking: “When will the pain end?”
Similar to what we saw at the end of 2008, there was almost nowhere for investors to hide during the entire month of April. And then, as if to put the nail in the coffin, the final day of trading saw the Nasdaq drop 537 points and the Dow drop 939 points. It was a record month, and not in a good way. ROBO Global was no exception. By the end of the carnage, all of our indices finished down sharply, with the ROBO Global Robotics and Automation Index ETF (NYSE: ROBO) closing -13.64%; the ROBO Global Healthcare Technology and Innovation ETF (NYSE: HTEC) ending at -15.43%; and the ROBO Global Artificial Intelligence ETF (NYSE: THNQ) faring worst of all, down -16.64% for the month1.
Every investor knows that there are always risks in the market, and some of those risks may change every year. We expect this time to be no different. Last week’s report that the US Real Gross Domestic Product (GDP) for 1Q22 contracted at an annualized rate of -1.4%2 had many wondering if this could be the moment the doves had been waiting for—that the Fed may have found a reason to “blink” with respect to its tightening plans. As we move into the month of May, whatever lies ahead should surely become a bit clearer.
Thankfully, even in today’s topsy-turvy environment, we believe few themes are as investable and impactful as robotics, automation, and artificial intelligence. As we continue to head into earnings season, we expect orders at many of the companies in the ROBO ETF to continue to trend upwards. Our expectations are based on a variety of drivers that remain in place. Here are the top three:
While it’s true that the markets are treating stocks with a similar brush in terms of risk, our indices are designed to try to weather periods like these. Our goal has always been to offer investors access to what we believe are quality companies across the entire global value chain of automation. Our ETFs include companies with strong balance sheets, high market share, and proven technology leadership, with the diversification benefit of minimal overlap to broad-based indexes. No investment is a sure thing, but as we travel this bumpy road together, we believe the ROBO Global ETFs could be a unique way for investors to access potential growth in the month and years to come.
1 ROBO Global®, S&P CapitalIQ, For standardized performance data current to the most recent month end, please visit www.roboglobaletfs.com.
The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted.
Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Holdings are subject to change.
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results.This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. Please consult your financial advisor for further information.