The 5G rollout and the related investment thesis are building momentum, but stock picking in this space can be tricky. The First Trust Indxx NextG ETF (NXTG) is an ETF that can ease that burden for investors.
The First Trust Indxx NextG ETF, formerly First Trust Nasdaq Smartphone Index Fund, seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Indxx 5G & NextG Thematic Index SM. The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks and depositary receipts that comprise the Index.
“As is the case with any other thematic fund, investors need to assess the longer-ranging implications and opportunities available with NXTG – an endeavor that’s made somewhat tricky due to general framing of the 5G conversation. Initially, 5G was positioned as a 2020-21 theme, leaving investors to ponder the utility of related assets after the initial rollout is completed,” according to Nasdaq.
NXTG’s 5G Framework
As we get ready for the next step in the telecommunications evolution, investors should be prepared for the onset of the 5G network and other technology innovations, and how it will reshape the economy.
NXTG’s index is designed to track the performance of companies that have devoted, or have committed to devote, material resources to the research, development, and application of fifth-generation (“5G”) and next-generation digital cellular technologies as they emerge.
“Given the breadth of market opportunities for 5G, one that spans demand for components to real estate, investors should consider a broad approach, such as the one offered by NXTG,” according to Nasdaq.
While they are still in the early stage of implementation, 5G networks will help power a meteoric rise in the Internet of Things technology, providing the infrastructure required to carry massive amounts of data, allowing for a smarter and more connected world.
The concept is that 5G will be ubiquitous, and someday gadgets like your vacuum cleaner or lawnmower might use 5G. It’s often claimed to be one of the most important milestones in technology and, with companies like Verizon creating ads that suggest, it offers “unprecedented power” for consumers. 5G will be more reliable, faster and pervasive.
“Currently, there are about 80 million 5G mobile phone subscriptions in the world, a number that’s forecast to more than triple to 243 million next year before rising to 1.9 billion in 2024,” notes Nasdaq.
“As a percentage of network coverage, 5G stands at seven percent today, but it’s projected to soar to 55 percent in 2025. Forecasts like that highlight the long-term potential available with NXTG.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.