Artificial intelligence (AI) has been a major driver of stock market gains in recent years, and that's likely to continue since we're still in the early stages of this growth story. Analysts predict the AI market will reach into the trillions of dollars -- that will happen in about a decade, illustrating that this is indeed an area with much growth to come.
But AI isn't just one simple story. Instead, it has many related technologies that also could generate revenue and share price performance for the companies involved. And one of those areas is robotics. In fact, AI giant Nvidia has spoken extensively of this area. Nvidia CEO Jensen Huang has even predicted robots will be the next $10 trillion industry, and in a recent interview with CNBC said this decade will be the one of autonomous vehicles and robotics.
So now looks like the perfect time to get in on this industry with explosive growth potential, and the good news is you can do so with $100. Let's check out the best robotics ETF to invest in right now.
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Why you should buy ETFs
First, though, let's consider why it's a great idea to opt for an exchange-traded fund (ETF) rather than just picking a couple of robotics stocks. ETFs invest in a large number of stocks according to a particular theme, so by choosing an ETF, you'll gain instant exposure to a broad range of potential winners. This diversification lowers your risk and increases your chances of success. It also means that if you aren't yet an expert in a particular area, you can rely on the fund doing the heavy lifting of choosing the players that may score a big win down the road.
Of course, this doesn't mean you shouldn't continue stock picking -- you'll generally see a bigger gain from a winning stock if you hold shares directly than through ETF exposure. But choosing an ETF can be a good alternative if you're not too comfortable with a particular field or if you'd like to add diversification to your portfolio. Stock picking and ETF investing are highly complementary.
Now, let's consider this top fund to pick up today, and this is the Ark Autonomous Technology and Robotics ETF (ARKQ +1.22%). The fund is part of the portfolio of famous investor Cathie Wood, founder of Ark Invest and a supporter of innovations that could be considered "disruptive."
NYSEMKT: ARKQ
Key Data Points
Cathie Wood's investment strategy
The Ark Autonomous Tech and Robotics ETF fits well into Wood's investment strategy, including more than 30 companies involved in various specialty areas under this theme, from intelligent devices to neural networks and next generation cloud technology. Wood believes in identifying innovators early and getting in on every aspect of a particular technology of the future.
This top investor and her team have their fingers on the pulse of the most innovative areas within technology, suggesting they are assembling a strong group of potential winners. But you won't have to pay a high price for this expertise: ETFs involve some fees, expressed as an expense ratio, and this fund's remains at a reasonable level -- under 1% -- and that means you can invest without worrying about fees eating into your returns.
The fund's biggest holdings -- each with a weight of 10% -- are drone-maker Kratos Defense and Security and electric vehicle giant Tesla. AI-driven software company Palantir Technologies and cloud leader Amazon also are among the top 10 positions in the fund. So, by investing in this ETF, you're gaining broad exposure to many types of companies that could win as autonomous technology and robotics take off.
The fund so far has delivered growth to investors, advancing more than 50% over the past year and more than 300% since its inception about a decade ago. Considering that we're still in the very early days of autonomous and robotic technology, though, performance could potentially explode higher as this story evolves, meaning the biggest growth opportunity may be at some point in the future. That's why it's a wise idea to put your $100 into this ETF today and hold on as this exciting growth story develops.
