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The Next Big Theme: November 2019

Nov 12, 2019

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Artificial Intelligence & Drones

Autopilot Engaged  

The Drone Racing League (DRL) held a first-of-its-kind tournament that featured drones piloted by artificial intelligence (AI). The DRL partnered with Lockheed Martin to host the event and promote advances in AI technology. AI has defeated humans in board games like chess and go, but humans still rule drone racing – for now. Human pilots compete using custom-built racing drones capable of traveling more than 90 mph.1 For this AI event, competitors used the same hardware, but replaced pilots with AI software, which did not use any GPS, data relay, or human intervention. Nine teams from around the world qualified for the tournament, with the winner taking home a $1 million cash prize.

Alphabet’s Wing takes off

Autonomous delivery drone service Wing, an Alphabet subsidiary, kicked off its delivery service in Virginia. Users only need to download Wing’s app to receive air delivery of goods from companies like FedEx and Walgreens. Rather than landing the drone, which is a major safety concern, Wing’s aircraft gently lowers the order down on its tether and unclips the item for users. Test flights for this first-of-its-kind drone delivery system totaled roughly 80,000 over the last three years.2 Wing aims to reduce traffic congestion in cities and ease CO2 emissions attributable to the transport of goods, as the drones use an all-electric power system with zero emissions.

Cannabis

Edible Arrangements: Canada’s Cannabis 2.0 underway

On October 17th, Health Canada, the governing body that oversees the country’s cannabis industry, started accepting applications from companies prepping cannabis-based products for sale. The applications serve as 60-day notices to Health Canada, after which Canadians will have access to hundreds of products, including CBD-infused spring water, mints, chocolates, gummy candies, and multi-flavor pens and vapes. Health Canada requires companies to use child-resistant and plain packaging for edibles to lower the risk of accidental consumption and make packages less appealing to young people. The label must also display the standardized cannabis symbol and a health warning. In addition, companies cannot make any claims about health benefits or nutrition on the label.3

Electric Vehicles

Not Your Father’s Ford

Ford doesn’t have an electric vehicle (EV) fleet yet. But that’s about to change. The automaker expects to start deliveries of its electric-SUV next year. The SUV has a Mustang-inspired design and a range greater than 300 miles, more than the 250-mile range for the Tesla Model 3 Range Plus.4 To charge their EVs, Ford announced the rollout of a 12,000-station network in the U.S. as part of a collaboration with VW-owned Electrify America and Greenlots.5 The stations are expected to support other EV models as well. For home charging setups, Ford teamed up with Amazon for installation services.

Lithium & Batteries

More than Goodenough

The 2019 Nobel Prize in Chemistry went to the trio of John B. Goodenough, M. Stanley Whittingham, and Akira Yoshino for laying the foundation for our rechargeable world. According to the Nobel organization, lithium-ion batteries have revolutionized our lives since they first entered the market in 1991. Whittingham worked to develop fossil fuel-free energy technologies in the 1970s. He managed to develop a lithium battery, but it was too explosive to be viable. In 1980, Goodenough, who at 97 is the oldest laureate to receive a Nobel prize, picked up where Whittingham left off and made a much more powerful, and stable, lithium-ion battery using cobalt oxide. Five years later, Yoshino created the first commercially viable lithium-ion battery.

Autonomous Vehicles

Ridin’ Solo

Alphabet’s autonomous vehicle (AV) division, Waymo, announced that it will begin testing without trained drivers joining along for the ride. Previously, trained drivers sat ready to take control during the millions of test miles driven by Waymo’s AVs. With significant progress made, select riders in Phoenix, Arizona soon will be able to enjoy an AV all to themselves, though they will be able to access a support agent through the car’s help button on an app. Notably, self-driving technology is a transition, not a switch. Ride-hailing technology could give consumers access to AVs at a low-cost entry point, rather than buying an AV for themselves.

E-commerce & Robotics

An Automation Arms Race

E-commerce companies like Shopify rely on AI technologies to automate their fulfillment centers. And Shopify wants to accelerate its growth potential with fulfillment networks capable of competing with Amazon. The company wants to provide clients with timely deliveries, lower shipping costs, and everything required to handle deliveries and returns. Shopify’s recent $450 million acquisition of 6 River Systems will integrate fully automated collaborative-robots (co-bots) into its picking process, as well as autonomous pick-carts that can navigate fulfillment centers. 6 River’s co-bots could accelerate cart pick rates by 2–3x and, given its cost-savings economics, have a 12–18 month payback period.6

THE NUMBERS 

The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.

INTRO TO THEMATIC INVESTING COURSE – ELIGIBLE FOR CE CREDIT

Global X has developed an interactive, self-guided Intro to Thematic Investing course, that is designed to share the latest ideas and best practices for incorporating thematic investing into a portfolio.

This program has been accepted for 1.0 hour of CE credit towards the CFP®, CIMA®, CIMC®, CPWA® or RMA certifications. To receive credit, course takers must submit accurate and complete information on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.

Questions on receiving CE credit may be sent to: Education@globalxetfs.com

KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X

To learn more about the disruptive themes changing our world, read the latest research from Global X, including:

ETF HOLDINGS AND PERFORMANCE:

To see individual ETF holdings and current performance across the Global X Thematic Growth Suite, click the below links:

Category: Articles

Topics: Consumer Economy, Disruptive Technology, Technology

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Investing involves risk, including the possible loss of principal. There is no guarantee the strategies discussed will be successful. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments may be subject to higher volatility. There are additional risks associated with investing in lithium and the lithium mining industry. The investable universe for thematic ETFs may be limited. The funds are non-diversified.

Video Game and Esports and Cybersecurity Companies are subject to risks associated with additional regulatory oversight with regard to privacy/cybersecurity concerns, shifting consumer preferences, and potential licensing challenges. Declining or fluctuating subscription renewal rates for products/services or the loss or impairment of intellectual property rights could adversely affect profits. Thematic companies may have limited product lines, markets, financial resources or personnel. They typically engage in significant amounts of spending on research and development, capital expenditures and mergers and acquisitions.

Investments in infrastructure-related companies have greater exposure to the potential adverse economic, regulatory, political and other changes affecting such entities. Healthcare, Pharmaceutical, Biotechnology and Medical Device companies can be affected by government regulations, expiring patents, rapid product obsolescence, and intense industry competition. The risks related to investing in cloud computing companies include disruption in service caused by hardware or software failure, interruptions or delays in service by third-party data center hosting facilities and maintenance providers, security breaches involving certain private, sensitive, proprietary and confidential information managed and transmitted by cloud computing companies, and privacy concerns and laws, evolving Internet regulation and other foreign or domestic regulations that may limit or otherwise affect the operations of such companies.

Cannabis companies are subject to various laws and regulations that may differ at the state/local, federal and international level. These laws and regulations may significantly affect a Cannabis Company’s ability to secure financing/traditional banking services, impact the market for cannabis business sales and services, and set limitations on cannabis use, production, transportation, export and storage.

Investing in securities engaged in the social media industry include disruption in service caused by hardware or software failure; interruptions or delays in service by third-parties; security breaches involving certain private, sensitive, proprietary and confidential information managed and transmitted by social media companies; and privacy concerns and laws, evolving Internet regulation and other foreign or domestic regulations that may limit or otherwise affect the operations of such companies.

Information Technology companies can be affected by rapid product obsolescence, and intense industry competition. Risks include disruption in service caused by hardware or software failure; interruptions or delays in service by third-parties; security breaches involving certain private, sensitive, proprietary and confidential information managed and transmitted; and privacy concerns and laws, evolving Internet regulation and other foreign or domestic regulations that may limit or otherwise affect the operations. Healthcare, Pharmaceutical, Biotechnology and Medical Device companies can be affected by government regulations, expiring patents, rapid product obsolescence, and intense industry competition.

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Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC or Mirae Asset Global Investments. Global X Funds are not sponsored, endorsed, issued, sold or promoted by Solactive AG, nor does Solactive AG make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO, Global X nor Mirae Asset Global Investments are affiliated with Solactive AG.

Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. This information is not intended to be individual or personalized investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.