NVDA - ROBO: Beware Of Risks Surrounding The Seemingly Promising Theme

• ROBO's investment mandate is to track the ROBO Global Robotics and Automation Index, which is calculated by Solactive AG.
• As of December 25, ROBO was long 82 stocks. In its equity basket, titans like NVDA are mixed with mid-caps like AMBA and small-caps like APPH.
• ROBO has failed to outperform IVV since November 2013 despite especially sterling 2017 and 2020. It has been languishing this year precisely as its peers focused on innovation. It should be noted that apart from capital rotation, the softness in the yen was likely among the factors that crimped its returns in 2021.
• 25% turnover for a thematic fund is an acceptable level, probably even close to excellent. But costs are clearly burdensome. It is even more expensive than actively managed ARKQ.
• Interest rates are a significant risk for its holdings and the foreign currencies it is exposed to. ROBO is a Hold.

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