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Exciting Prospects For Hidden Gem Among Leveraged ETFs

In an expansive universe of geared exchange-traded funds, it's not surprising that some fall through the cracks. Some of those funds are worth leaving aside while others should be embraced.

Benzinga · -

In an expansive universe of geared exchange-traded funds, it's not surprising that some fall through the cracks. Some of those funds are worth leaving aside while others should be embraced.

What Happened

These days, it's not difficult to find geared ETFs that are delivering exhilarating returns. One doing so in somewhat quiet fashion is the Direxion Daily Robotics AI & Automation Index Bull 3X Shares (NYSE:UBOT), which is higher by almost 24% over the past month after jumping 6.37% on Monday.

UBOT is the only leveraged robotics ETF and it attempts to deliver triple the daily returns of the Indxx Global Robotics and Artificial Intelligence Thematic Index. On a standalone basis, both artificial intelligence (AI) and robotics are growth themes, but for short-term traders, UBOT enhances those growth profiles.

Why It's Important

One of the reasons UBOT is an interesting bet for tactical traders is the myriad market opportunities for AI and robotics, including healthcare.

“Robotics is increasingly being considered synonymous with progress within multiple industries,” a Verdict Medical Devices article by GlobalData Thematic Research noted. “Healthcare robotics has been specifically developed to improve patient outcomes. Healthcare robotics varies, as there are multiple ways they can be used in a healthcare setting. The industry is expanding with the adoption of automation across all areas. Surgical robotic systems are a paragon of robotics in the MedTech industry. Over the next five years, there will be rapid growth in the robotics market within the healthcare sector.”

In fact, the coronavirus pandemic is spotlighting the intersection of robotics and healthcare, indicating there's plenty of long-term growth to be had here.

“The medical robotics segment holds enormous promise, particularly for surgical interventions that require high levels of precision,” notes GlobalData. “The evolution of technologies such as cloud computing and AI will drive innovation in this space, thus reducing, and sometimes even eliminating, the need for the surgeon to be physically present.”

What's Next

Data indicate UBOT is also a play, albeit a rapid fire one, on aging populations, which should boost the need for medical robots.

“The number of robots being used to provide care and support to elderly and disabled patients is expected to increase significantly over the next decade, particularly in countries like Japan that are facing a predicted shortfall in the number of caregivers,” notes the report.

Traders added $8 million to UBOT this year.