A new phase of industrialization is giving rise to a host of emerging technologies and upstart businesses, and in doing so, creating new and exciting opportunities for investors.
250 years since the first industrial revolution, the ongoing merger of our physical and digital worlds is changing the way we live, work and play. Industrialization has continued evolving and we’re now in the midst of a new phase – the fourth industrial revolution, or Industry 4.0.
Industry 4.0 first began around the turn of this decade and encompasses the key technological developments that are changing the world and driving our future.
Dubbed with the ticker "FOUR", the Horizons Industry 4.0 Index ETF was developed to give investors exposure to the companies that could potentially thrive in the coming years. FOUR trades on the Toronto Stock Exchange and tracks the Solactive Industry 4.0 Index, designed to capture the five key industry themes that make up Industry 4.0 – advanced robotics, the Internet of Things (IoT), cloud and big data, cyber security, as well as augmented reality and 3D printing. For details, click here to read Horizons ETFs’ Industry 4.0 whitepaper.
“We thought that providing a broad solution that offers exposure to a wide range of exciting Industry 4.0 companies would certainly be appealing for Canadian investors,” says Mark Noble, Senior Vice-President, ETF Strategy at Horizons ETFs. “FOUR enables investors to have that in their portfolio with just one ETF.”
Noble explains that FOUR is structured to provide exposure to the companies creating the building blocks for Industry 4.0.
"Initially, when you are at the early stages of an industrial evolution, you want to be invested in companies that are building the blocks for future success; not necessarily those which are taking advantage of it at the current time," he explained.
Companies under the advanced robotics subcategory focus on artificial intelligence and automation – two vital components in the modern world of business, both of which can dramatically reduce the overall cost of production while at the same time improving services. The industry is expected to reach USD $1.2 trillion by 2025.
The IoT players, on the other hand, are involved in creating a growing network of internet-enabled, “smart” devices. Investors exposed to this industry are buying into a sector that is expected to hit USD $122 billion by 2022.
According to the new Horizons ETFs whitepaper, the ability to utilize and integrate data will be a key indicator of success for the sectors in Industry 4.0.
"Big data is like the fuel for Industry 4.0. That’s because data, and the quality of data, are really what makes some of these technologies more effective than their existing infrastructure," says Noble.
He expects these industries to be part of a multi-decade growth trend. As some tech giants of today struggle with growth and PR issues, emerging companies with true growth potential may provide the opportunity to pay off for forward-thinking investors.
"Having direct exposure to Industry 4.0 makes sense for the vast majority of Canadian investors,” says Noble.
Get to know more about Industry 4.0 by downloading this whitepaper.