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Robotics is not a bubble, says AAA-rated Pictet manager

Robotics is not a bubble, says AAA-rated Pictet manager

The Pictet Robotics fund swelled to €3 billion shortly after launch and is now sitting closer to €6 billion in assets but the universe is expanding rapidly to produce investable areas.

That's the view of Citywire AAA-rated Peter Lingen, who oversaw the launch of the specialist fund and remains in place following a recent portfolio management change.

Speaking to Citywire Selector, Lingen said the robotics approach has been a strategy investors have really been able to connect with.

'Robotics is a developing theme that is going to affect everyone. It will affect all companies globally and I don’t think it’s going to lose its appeal,' he said.

In the Ucits-compliant fund Lingen looks for companies where the underlying trends are to drive productivity and increase product innovation. He said this has been one of the big selling points of the fund.

'The theme of robotics touches people in many ways, it could entail anything from robotic surgery to autonomous driving. I think people read up on these things and understand that investing in a specialised robotics/automation fund can be complementary to broader sector funds.

'This product is underpinned by long-term megatrends. The caveat to this is that although many of the companies in the universe are secular winners, they are also exposed to cyclical factors as well.'

Bubble talk

Lingen said investors have really adapted to the robotics theme, and addressed concerns that the sector is, in fact, in a bubble.

'We get a lot of questions about the quantum of flows that have come into the fund. I do not believe that the robotics theme is a bubble, as the technology trends which underpin it are so transformational.

'It touches all of us as individuals, from our own personal tech interests, from questions over whether or not robots are going to take over all of our jobs to the ways in which robotics will improve our quality of life.'

But how does Lingen continue to find value in such a niche area of investment? The Pictet star said the fund’s investable universe is always developing, allowing for a flurry of new ideas.

'The universe develops all of the time. We have a universe of about 200 companies and about 12-18 months ago consolidation began to happen.

'I was concerned and thought ‘is my universe disappearing’? We were sitting on all of these great assets which were getting gobbled up by companies embracing the change themselves. However, our investable universe has actually continued to expand since then.

'There are areas which we have not addressed so far, for example, business process automation, which opens up new interesting opportunities for the fund in the longer term.

'Healthcare companies have been an excellent area for investing as well as larger companies targeting spin-out businesses,' added Lingen.

Performance

Lingen currently has 19.4% of the fund allocated to Japan. He said a real performance driver in the short term has been Japanese companies in the fund.

'Companies like Fanuc (4.6%), Nidec (3.2%) Keyence (3.2%), Yaskawa and Daifuku have all benefitted from the cycle as well as from the structural rise of automation and robotics in China.

'Coming into the autumn we have also seen a fairly strong recovery in semiconductor companies. There has not been one single area that we would say is detracting or contributing, performance has actually been fairly broad.'

Over the one year to the end of September 2017, the Pictet Robotics fund returned 30.01% in US dollar terms. This compares with a 19.22% rise by its Citywire-assigned benchmark, the FTSE World TR USD, over the same time period.

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