Turnkey Tech Investing: October 2020 Market Brief
By Bill Studebaker, CIO & President, ROBO Global
The crescendo leading up to any presidential election day always brings a sense of adrenaline, excitement… and, inevitably, some anxiety. What’s the best cure for those nerves? Preparation.
As the election has drawn closer over the past few weeks, investors seem to have grown more complacent, penciling in a Biden win and counting on an eventual stimulus package. At the same time, investors appear to be taking the second wave of COVID-19 (and the high potential of a third and even fourth wave) for granted. This combination of factors has pushed equity volatility higher. As a result, the S&P 500 hasn’t been able to make a new closing high in eight weeks—the longest period since the new bull market began in March.
While the outcome of this week’s US Presidential election is sure to set off a wave of emotions throughout the world, I believe this is the perfect moment for investors to hit the reset button and get back to the fundamental work of investing. The key to long-term success will be to step back from whatever you may be feeling in this moment, take a close look at what is really happening across the market, and make decisions now that set the stage for growth, regardless of who ends up in the White House.
Here are two points to keep in top of mind:
- Automation technologies have helped fulfill new consumer demands. 2020 has been a year defined by verbs: Zoom, Tweet, Twitch, Message, Venmo, Snap, Post, and Uber (Eats), just to name a few. Each of these verbs connotes speed, which is fitting, especially considering that every one of these companies has helped fulfill a new and unprecedented need for consumers to do everything from home. In a COVID-19 world, the things we value most are time, convenience, and social interaction—and our ability to live, work, play, and eat from the safety of our homes is driven by the automation technologies.
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Robotics, artificial intelligence, and healthcare innovation will enable recovery. For decades, the benefits of robotics, AI, and healthcare innovation have been somewhat theoretical, with innovation and adoption occurring at a steady—but not particularly speedy—pace. The COVID-19 crisis elevated the critical nature of these technologies, bringing the importance of the internet, the need for advanced technologies in healthcare, and the ability of AI to fuel the future to the forefront. From our perspective, the fastest and most efficient path out of this crisis is through the use of robotics, artificial intelligence, and healthcare innovation.
As we have discussed repeatedly, the ROBO Global Methodology is designed to prefer the small-cap and mid-cap companies that often deliver higher earnings growth than larger-cap companies that are already highly valued—and often over-valued. Since their inception, our funds have favored subsectors that, by their nature, have been sheltered from the impact of the pandemic. At ROBO Global, we continue to invest in companies within these sectors that are able to operate normally during the pandemic and that are delivering solutions that matter in a COVID and post-COVID world.
Winter is coming—including the outcome of one of the most contentious US presidential elections in memory. But no matter which way the wind blows, investors who recognize and invest in the robotics, AI, and healthcare innovation technologies that are enabling our new world will be prepared for whatever lies ahead.
Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found on the Funds' full or summary prospectuses, which may be obtained at www.roboglobaletfs.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. International investments may also involve risk from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, and from economic or political instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and investments in smaller companies typically exhibit higher volatility. There is no guarantee the funds will achieve their stated objective. ROBO, HTEC, and THNQ are non-diversified.
The liquidity of the A-shares market and trading prices of A-shares could be more severely affected than the liquidity and trading prices of other markets because the Chinese government restricts the flow of capital into and out of the A-shares market. The funds may experience losses due to illiquidity of the Chinese securities markets or delay or disruption in execution or settlement of trades.
The risks associated with investments in Robotics and Automation Companies include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Robotics and Automation Companies, especially smaller, start-up companies, tend to be more volatile than securities of companies that do not rely heavily on technology. Rapid change to technologies that affect a company's products could have a material adverse effect on such company's operating results. Robotics and Automation Companies may rely on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies' technology.
The risks associated with Artificial Intelligence (AI) Companies include, but are not limited to, small or limited markets, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Rapid change to technologies that affect a company’s products could have a material adverse effect on such company’s operating results. AI Companies also rely heavily on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies’ technology. AI Companies typically engage in significant amounts of spending on research and development, and there is no guarantee that the products or services produced by these companies will be successful.
The risks associated with Medical Technology Companies include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation.
Diversification may not protect against market risk.
Beginning September 2, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to September 2, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times.