(Yicai) May 20 -- Investors have withdrawn more than CNY17 billion (USD2.5 billion) from robotics-themed exchange-traded funds so far this year amid a rally in the CSI Robotics Index, which tracks the performance of major Chinese firms in robotics, smart manufacturing, and artificial intelligence.

The 13 robotics-themed ETFs on the market had seen more than CNY17 billion in net outflows this year to May 18, according to Wind Information. Of that, CNY8 billion (USD1.2 billion) was pulled in 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 moved through three phases this year: a brief rally, a prolonged pullback, and then a strong rebound since last month. But ETF fund flows offer a different pattern -- the stronger the sector’s performance, the faster money has been leaving.

After the sector staged a major rally last year, valuations became relatively elevated and, in some cases, arguably overextended, a stock fund manager at a mid-sized public fund told Yicai. “This year, investors care more about actual performance than valuation,” he said. “If results fall short of expectations, they may choose to take profits first.”

Some of the funds opting to sell may have felt “trapped” during the earlier pullback, and decided to “cut their losses” and withdraw when the sector rebounded, the person said.

Since 2022, the pricing logic for the humanoid robotics sector has gone through a complete evolution, shifting from a focus on supply, technological progress, and domestic substitution for imported components to one centered on scenario demand, mass production, and earnings delivery, Song Weiwei, a fund manager at Lombarda China Fund Management, told Yicai.

Song said the most certain catalyst for the humanoid robotics sector lies in earnings delivery from upstream core component suppliers. That could come in the form of long-term orders from major international manufacturers, a rising share of robotics revenue in company financial reports, or net profit growth that beats expectations, he said.

For short-term trading funds, weak earnings performance would likely trigger a period of adjustment and capital outflows, Song pointed out. But for long-term investors who remain optimistic about the robotics industry’s future, price pullbacks could offer a chance to buy high-quality names at more attractive levels.

Editor: Futura Costaglione