We are nearing the singularity. Not that thing where robots are many times smarter than humans and can reproduce. That’s not here yet. What we’re talking about here is phase I of artificial intelligence: the internet of things.
Consider this: many of us will live in “smart homes” where you can turn on the lights while you’re not home and get the water boiling for pasta. McKinsey and Company calls these products “homebots” and their analysts believe these bots will increasingly manage and perform household tasks and may even establish emotional connections with us.
A smart home will be akin to a human central nervous system. A central platform, or “brain,” will be at the core.
Platforms will provide the foundation to integrate different devices while providing a consistent interface for the consumer, McKinsey report authors wrote earlier this year.
How to invest in these things? For starters, the frontrunners are easy picks: Amazon (AMZN 178,87 +0,72 +0,40%), Apple (Apple Inc. 172,62 -0,38 -0,22%), Google (Google Inc. 148,74 -0,94 -0,63%), and Samsung are already producing devices we can tell to turn on the radio. Savvier, high net worth investors need to consider putting money to work in venture capital. One of the cheapest and fastest ways is through the eight month old Internet of Things ETF by Global X (SNSR 36,42 -0,36 -0,98%).
Inside Global X’s Internet of Things
Global X has been a first comer on a number of ETF products. They run the biggest ETF for Colombia’s equity market (GXG 25,63 +0,04 +0,16%), which was one of the best performing ETFs for a time last year leading up to a peace deal between the FARC and the government.
SNSR is up 18.7% since it launched in September and is up 15% this year as of May 1, beating the S&P 500 by over 700 basis points.
Some 70% of the 43 holdings are U.S. based corporations. Worth noting, McKinsey’s favorites are not in Global X’s top 25. Singapore based STM Microelectronics (STM 46,95 -1,62 -3,34%) is its major overweight, with 10.8% weighted to the $6.9 billion semiconductor maker now focusing on smart driving and IoT. The stock is up 42.4% year to date and a whopping 171% in the last five years.
Another holding is U.S. based Skyworks Solutions (SWKS 106,32 -1,48 -1,37%). Skyworks makes analog semiconductors for the connected home, smart phones, tablets and wearables (think FitBit). The company’s stock is up 32.9% this year alone.
Daniel Burrus, founder and CEO of Burrus Research, considers IoT to be “the biggest disruptor” around. Venture capitalists to fund managers are already heavily invested, and it is not hard for investors to beat the benchmark, based on Global X’s early start out of the gate.