Commerzbank has licensed the new Solactive Industrial Robotics & Automation Index, a thematic benchmark tracking companies providing robotics and automation in an industrial context, to develop a suite of structured products.

The German bank is seeking to offer tailormade structures linked to the index, including volatility-targeted versions "suitable for capital-protected products, depending on the client view and their risk-return profile", according to Jorge Masalles (pictured), head of institutional and private bank sales at Commerz. "Some of our clients are able to take on downside risk to fund upside exposure," said Masalles. "For other clients, we can employ a fixed, annualised volatility mechanism, suitable for a capital-protected structure. The potential to create new indices, which is linked to the Solactive index, is limitless."

Robotics is an area of the equity market which many of Commerz's clients have shown an interest in, according to Masalles. "Often a theme that is prevalent in the daily news will translate into an investor idea, particularly if the story projects into the future," said Masalles. 'Industry 4.0', the term for automation and data exchange in manufacturing technologies, is more than just a flashy catch phrase, "it is a mixture of trends and technologies, which promises to reshape the way things are made," said Masalles. "The rise in reverse enquiries from our clients prompted us to act."

The number of products linked to robotics and automation has increased, featuring new underlying indices and single stocks, such as HVB Robotics Fund Risk Control 9 Index, Solactive Robotics and Drones Index, Mazor Robotics and iRobot Corp, according to SRP data. There are over 1,547 structured products linked to robotics and automation assetsGermany has more than 1,500 products and Switzerland over 1,000.

The Solactive index lends itself to 'booster' type structures providing geared upside or coupled with a volatility control mechanism, as well as capital protection to investors, according to Timo Pfeiffer, head of research at Solactive. "The whole concept is about developments around industrial production and ways how this is becoming increasingly digital and connected," said Pfeiffer.

The index offers investors the opportunity to capitalise on the digitisation trends affecting world economies, with a specific focus on the ongoing changes in the manufacturing and industrial sectors, according to Pfeiffer. "Companies included in our new index play a crucial role in the transition to Industry 4.0.," said Pfeiffer.

Industrial robotic sales will triple by 2025, reaching an estimated annual revenue of about US$45bn, according to ABI Research. "The strong demand for robots and automation across all major industries seems to indicate a great market outlook for industrial robotics, with double-digit growth rates in the next couple of years," said Pfeiffer.

The index holds globally listed companies with a minimum market capitalisation of US$1bn operating in sectors such as factory automation equipment, semiconductors, industrial machine parts and programmable logic devices. The index rules only select companies with positive one-year returns. It is equally-weighted and includes 30 constituents. The index is calculated by net total return and is published in US dollars.

Commerz was the fourth most active provider across markets and product segments including non-retail, leverage and flow with over 175,000 structured products marketed worth an estimated US$8.2bn in 2017, according to SRP data.

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