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Kevin Curran: Robotics and AI either sound like an exciting leap into the future or a Asimov-esque inching towards a dystopian future. So to understand the secular shift and know what to expect in the coming years, we have Blll Studebaker, CIO of Robo Global, which is one of the first movers in this space. So Bill, I wanted to talk about ubiquiti first because it's seems like years ago we were talking about cloud moving into even non tech industries and I wonder are robotics and AI kind of the logical next step for that tech shift?

Bill Studebaker: I think the shift that we're seeing is the most undeniable trend we probably ever seen. We are on the cusp of ubiquitous automation and we sort of had the belief anticipation this cause then it happened six years ago. But fast forward now, and the rate of change is now truly accelerating. Really? Why? Because think about computing. Our computing power is essentially doubling every 18 months. But our cost of computing is plummeting. So this is now creating an array of use cases that were just Elon Musk science fiction a few years ago. And so really with, this is a really ubiquity of new use cases and it's happening because ROIs are declining rapidly. And so, this is a big shift that we're going through and investors need to really get embraced for this.

Kevin Curran: Yeah, I mean you touch on Moore's law when we talk about, you know, the, the shift in a computing power, et cetera. But what I think is interesting is this extends not only to those semiconductors or tech industry plays, but across industries. And I wonder what are the sectors that are picking up on robotics and automation most quickly? Right now.

Bill Studebaker: It's happening everywhere. I mean, these are not niche technologies. Rather they're foundational technologies that are being applied to all industries, all markets. And it's happening now. It's interesting, you know, Sundar Pichai from Google just said it more recently that AI is the most important technology of our lifetime. Bill Gates, back in 2012 was talking about robotics being more ubiquitous than computers and more transformed with the Internet. That's exactly what's happening. And so we're touching all sectors of the economy, but two areas that we really are highly convicted on is we think about logistics automation, and we think about healthcare, okay? Amazon's purchase of Kiva system has ignited a robotics arms race. It's not just about the cost of the product, it's about the speed of fulfillment. You order from Amazon, not because you want the product, you know, in days you want as soon to be inside of ours. That only comes about, you know, with automation. And so this is happening all over the world. That growth is very evident. We think about healthcare. Healthcare is going through the most amazing fundamental shift that humanity has ever seen. Why, we're going from a world that prior has been just sick care, treat the problem after it exists versus now moving to a world of prevention, prediction, individualizing medicine, okay? Effectively what's happening is that we're going to improve the quality of life and extend our human longevity's. So there's going to be trillions of dollars up for grabs here. So we're really excited about that, which is why we just recently launched an index. And a corresponding ETF, the ticker is HTEC that just launched last week.

Kevin Curran: Interesting. Well, I mean you touch on your indexing method and I wonder a lot about if there's winners and losers in this or specific sectors to target. Why is indexing the way to go?

Bill Studebaker: Well, we think it's the way to go because investors always think they want to pick the obvious winners and losers and active management has struggled really the last decade because people sell what works, they sell what doesn't work. And they're stuck with that in between, which doesn't add a lot of value. We're not throwing paint against the wall here in our index. In our Robo index, there's 88 companies. And I think that we have a very interesting lens to forecast and see what's happening. We have a team thats focused exclusively on robotics and AI. Unlike other, index providers that may be looking at a slew of other opportunities, we're focused on this only. We have a team of industry experts on our staff. We have seven PhDs that are the who's who in the industry, that have creative technologies that have done amazing research and our professors in the industry. So we think this gives us a huge competitive advantage to forecast what we think are going to be the future, you know, winners and losers.

Kevin Curran: Interesting. And you talking about investment strategy there with active management, one of the emerging trends in investments is ESG investing. And one of the concerns about automation and robotics would be on that acronym where if you automate or make robots do the work that humans would do, are you not displacing millions of workers? Uh, what's your thoughts on that?

Bill Studebaker: Well, if automation is stealing our jobs, they're doing a bad job of it. Or if robotics are, so if you look at countries that have the highest utilization of automation have guess what? The lowest unemployment rates. Okay. And so think about the Amazon example. Amazon's purchase of Kiva systems, which is the 200,000 robots that do the fulfillment, was created roughly in 2012 for Amazon. During that period of time, Amazon has not reduced employment, they've actually accelerated employment. Why? Because they've created new demand. I think the world that we're going to be going in is the nature of work is changing. Okay. We're going to much more knowledge based, um, you know, work environment. The nature work has been changing for hundreds of years. It's going to continue to change. Okay. 25% of the jobs that exist today did not exist 25 years ago. So I think you have to have a lot of faith and confidence that that is going to continue. Now there will be some structured work that will be automated. You know, there is an inevitability that that's going to happen. But again, I think that the new jobs that come out, are going to likely far surpass most investors expectations.

Kevin Curran: Interesting. And the last thing I wanted to touch on was kind of the worries in the near term because as you said, this is going to change the nature of things and maybe the next five to 10 years and beyond. But there's a lot of concern right now about the trade war. And all the supply lines that underwrite a lot of this technology coming out of China or at least interacting with China. Is that something that investor's playing the secular shifts should keep in mind in the near term?

Bill Studebaker: Well, I think that have to be focused exclusively on the shift. I mean the trade war, you know, clearly is of concern. Okay. And I don't have a crystal ball on the exact outcome. I am optimistic that we're likely going to sort this out. Why ,it's about technology leadership. China has the desire to be in a position of being an AI Hegemon by 2030. And I think China has a high probability to be really successful there. Why? They've got the people, they've got the data, they got the political system in the capital system to support that evolution. Now in a world that becomes, shall we say, protectionist, what's going to happen? Okay. Manufacturing is it become localized? What's going to have to happen? You're going to have to increase automation to support the demand from the local standpoint. China needs to increase their automation capabilities to compete with Western standards. But also to supply, you know, their domestic economy. Should they go down the route of protectionism? I'm skeptical that's the case. But if that's the case, I still think with automation, it's heads you win, tails you win. In a world where growth becomes starved, people are going to put their hands in their pocket. Capital spending will dry up, inevitably and then people have to do what? Get back to managing their business. That's improving productivity, cutting costs, generating growth. That's automation. In a world where growth is abundant, the only way to meet the demand is with automation. So I'm really optimistic about the future.

Kevin Curran: But does that set up kind of a new cold war in a sense of who can get to the frontier of automation first, whether it's the US, China or are another nation?

Bill Studebaker: Well thats happening now. We've got an undeniable robotics and AI arms race globally. There's 196 countries in the world that now have to look at these technologies to enable their country or they will become a third world country overnight. That's how big disruptive and powerful this trend is. And that's why, you know, we've taken the approach of investing directly in robotics, AI, because we think it's that big and that open ended.

Kevin Curran: Interesting. Well, we'll certainly be keeping investors abreast of it if they want to remain first world investors. Thank you very much Bill.

Bill Studebaker: Thank you.

Bill Studebaker, CIO of ROBO Global, the creator of the world's first robotics and automation ETF (ROBO - Get Report) , says FANG is yesterday's trade and the next big thing is in robotics, automation, and artificial intelligence, or RAAI.

"In a world where growth becomes starved, people are going to put their hands in their pocket. Capital spending will dry up inevitably and then people have to do what? Get back to managing their business," he explained. "That's improving productivity, cutting costs, generating growth. That's automation. In a world where growth is abundant, the only way to meet the demand is with automation. So I'm really optimistic about the future."

His bullish sentiment is backed up by tech titans like Alphabet (GOOGL - Get Report) CEO Sundar Pichai and Microsoft (MSFT - Get Report) founder Bill Gates who have both called out the transformational shift these new technologies hold for the country, the economy, and investors as they become increasingly ubiquitous.

"[Automation] is happening everywhere. I mean, these are not niche technologies.," Studebaker said. "Rather they're foundational technologies that are being applied to all industries, all markets, and it's happening now."

Studebaker cited healthcare (HTEC) as a massive opportunity for innovation and automation that his firm is now targeting.

He added that the shift has led to an arms race not only among companies, but among nations, and those well-positioned in each lens stand to profit in a big way.

To be sure, among ESG-focused investors there has been a modicum of concern on automation and its potential elimination of millions of logistics, data entry, and even investment and banking roles. For example, on Sunday Deutsche Bank (DB - Get Report) announced it would cut thousands of jobs in part to focus on technology investment and automation.

However, Studebaker sees the long term prospects as promising for job creation as well, assuaging some of those fears.

"If automation is stealing our jobs, they're doing a bad job of it," he said. "If you look at countries that have the highest utilization of automation have the lowest unemployment rates...think about the Amazon example. Amazon of its purchase of Kiva Systems, which is the 200,000 robots that do the fulfillment, Amazon has not reduced employment, they've actually accelerated employment because they've created new demand."

He added that 25% of the jobs that exist today did not exist 25 years ago, providing precedence for a shift in the labor market, rather than an elimination of employment opportunities.

For more of Studebaker's thoughts on the emerging technologies, the trade war's impact on the nascent industries, and why passive investing is the best play at this point.

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Watch the full interview below.