(Yicai) May 20 -- Despite the rally in the CSI Robotics Index, funds have withdrawn more than CNY17 billion (USD2.5 billion) from robotics industry-themed exchange-traded funds this year.

The net outflow of funds from the 13 robotics-themed ETFs on the market exceeded CNY17 billion this year as of May 18, according to data from Wind Information. Of that, CNY8 billion (USD1.2 billion) was withdrawn this month alone.

The CSI Robotics Index hit an 11-year high of 2,250 points yesterday and ended the day at 2,249 points, Wind data also showed. It has risen 18 percent this year.

The robotics sector has gone through three phases this year: a brief rally, a continuous pullback, and a strong rebound since April. However, from the perspective of ETF capital flow, there is a trend of ‘the better the sector performs, the faster the capital withdraws.’

After the robotics industry experienced a huge rally last year, its valuation was relatively high and even somewhat overvalued, an equity fund manager at a mid-sized public fund told Yicai. “This year, people are more focused on actual performance than valuation,” he noted. “If the performance misses expectations, they may take profits first.”

Some of the funds choosing to sell might have felt “trapped” during the previous pullback cycle, and thus decided to “cut their losses” and withdraw when the sector rebounded, the equity fund manager suggested.

Since 2022, the pricing logic of the humanoid robot sector has undergone a complete evolution process from ‘based on supply, technology evolution, and substitution of imported components with domestic ones’ to ‘based on scenario demand, mass production and application, and performance realization, Song Weiwei, a fund manager at Lombarda China Fund Management, told Yicai.

Song believes that the most certain catalyst for the humanoid robot sector lies in the performance realization of upstream core component enterprises, such as if there are long-term orders from major international factories, if the revenue proportion of the robot business in firms’ financial reports increases, or if the net profit growth rate exceeds expectations.

For short-term trading funds, when the performance of the sector fails to meet expectations, there will be a period of adjustment and capital outflow, Song said. For long-term holding funds that are optimistic about the long-term development of the robotics industry, the period of adjustment might be a window of opportunity for investment in high-quality targets.

Editor: Futura Costaglione