How to gain exposure to the automation macro trend

Solactive's Nordic Industry 4.0 Performance Index consists of 20 Nordic technology companies focusing on manufacturing industry and telecom. The index is more or less equal weighted between the included companies. The largest index member, the Finnish telecommunications company Elisa, has a weight of 5.3% and the smallest, Valmet, has a weight of 4.6%. Some of the other 18 companies are Vestas, Hexagon and Veoneer. The idea of the index is to provide easy exposure to the macro trend of increasingly independent factories, where the machines coordinate their work with each other to an increasing extent without the involvement of people.

As the expansion of 5G networks and, among other things, better autonomous imaging and
navigation systems, more and more of the manufacturing industry can be automated. But of
course, this development does not happen by itself. Nordic Industry 4.0 has brought together
the companies in the Nordic countries that are most important in realizing the vision of
autonomous manufacturing.

Although the stock market is currently slightly jittery, due to increased risk aversion in the wake
of the corona virus, it will hardly affect the long-term development of the companies in the index. In the short term, companies such as Atlas Copco, Volvo, Sandvik, Epiroc and SKF can of
course experience reduced demand when China temporarily slows down, and not least the
shares may be subject to selling pressure. In a larger perspective, however, it will hardly be
more than a temporary setback. If investors should worry t all about the long term
consequences, it’s rather the travel industry, including airlines and hotels, you should watch out
for, as long as it is unclear how large the spread and effects of the disease will be.

The transition to Industry 4.0 is not something that happens overnight, but is a long-term
development. The transition can contribute to sustained higher growth for the companies in the
index. For those of you who want to invest in prominent Nordic technology companies in one of
the most exciting macro trends in the 2020s, it may be worth taking an extra look at the
companies included in Solactive's index, or to make it easy to consider Vontobel's tracker that
captures the development for all 20 companies at the same time.