From factory workers to back-office finance professionals, thousands of people across the UK have seen their jobs automated in recent years, and research suggests that this trend is likely to continue. According to a recent report from the Office for National Statistics (ONS), 1.5m people across the UK are at high risk of losing their jobs to automation, while the National Bureau of Economic Research has stated that by the mid-2030s, between 45% and 57% of workers worldwide may have seen their jobs being replaced by automation technology.
While it’s unfortunate that many people may lose their jobs in the years ahead, the upside of this situation is that the technology associated with automation could provide more jobs as well as numerous opportunities for investors. Here’s a look at two niche ETFs that could help investors profit from the automation trend (and potentially hedge career risk).
Naturally, one of the main areas of technology that is driving the automation trend is that of robotics. This is not a new field, yet robot technology has advanced significantly in recent years and robots are now far more intelligent than they were in the past. They can prepare meals, assist shoppers, and even perform surgery. By 2030, up to a third of UK jobs could be done by robots, according to PricewaterhouseCoopers.
One way to invest in this field is the ROBO Global Robotics and Automation GO UCITS ETF (LSE: ROBG). This ETF is listed on the London Stock Exchange and tracks an index of companies that are involved in the robotics industry. Top holdings currently include Zebra Technologies, Daifuku Co and Mazor Robotics.
For the five years to the end of February, ROBG generated a return of nearly 130%, which is an impressive performance and shows that there’s plenty of money to made in this sector. Yet I believe there could be more gains to come as the robotics field continues to advance. Annual charges here are 0.8%.
Another niche area of the tech sector that is having a powerful impact on the way we work is artificial intelligence (AI). In the last decade, AI has come a long way and the technology is now helping machines complete sophisticated tasks that only a few years ago were thought impossible. Yet this could be just the beginning.
One ETF that I like within the AI space is the WisdomTree Artificial Intelligence UCITS ETF (LSE: WTAI), which is also listed on the London Stock Exchange. Unlike some other AI-focused tracker funds, this ETF has a very focused approach to investing in technology, and only invests in companies that are either enhancing, enabling or engaging AI technology. Top holdings currently include Blue Prism Group, Synopsys, and Cadence Design Systems.
This ETF was only launched last year so it doesn’t have a long-term performance track record, but in my view, it has significant potential given its focus. Annual charges are a low 0.4%.
Of course, there are plenty of other ways to invest in automation technology. Investors could also pick out a more generalised technology fund such as the Polar Capital Technology fund, or even invest in individual technology stocks such as Google or Amazon. Either way, a little exposure to this sector could be a good move, in my opinion.
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Edward Sheldon owns shares in Google and works as a freelance investment writer for WisdomTree Europe. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares) and Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.