As this year moves along, investors will undoubtedly hear more about the 5G rollout, a theme that can be tapped with ETFs, such as the Defiance 5G Next Gen Connectivity ETF (NYSEArca: FIVG).
The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. FIVG does this by tracking the BlueStar 5G Communications Index, and FIVG attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.
The 5G rollout is expected to be massive and present investors with significant opportunities.
5G means quicker downloads, much lower lag and a significant impact on how we live, work and play,” according to Verizon. “The connectivity benefits of 5G are expected to make businesses more efficient and give consumers access to more information faster than ever before.”
5G technology will use a higher frequency band versus the current 4G technology standard, resulting in faster transmission of data. Being able to transmit copious amounts of data at a faster rate is certainly of benefit for wireless companies and their users, but 5G could be a major disruptor in various industries.
FIVG “isn’t just a success story among 5G ETFs. It’s confirmation that some thematic funds can captivate investors. A few weeks ago, FIVG vaulted to $200 million and now has over $235 million in assets,” reports InvestorPlace.
The possible applications of 5G technologies are only in the exploration stages, and the possibility of returns is uncertain and may not be realized soon. Nonetheless, it presents an opportunity that could see early adopters reap the benefits, especially if the technology is utilized to its fullest capabilities. Pivotal to the FIVG thesis is the fund’s broad reach.
The fund features exposure to core carrier-grade networking equipment including cellular antennas and routers, mobile network operators, satellite-based communications, enhanced mobile broadband chips, new radio technology, wireless network test and optimization equipment, cloud computing equipment, software-defined networking or network functions virtualization, fiber optic cables, or cell tower and/or data center real estate investment trusts.
“FIVG’s deep bench is important because the 5G ETF allocates about 10% of its combined weight to Nokia (NYSE: NOK) and Ericsson (NASDAQ: ERIC). These are both credible 5G plays, but also two of the theme’s most obvious laggards,” according to InvestorPlace.
For more on disruptive technologies, visit our Disruptive Technology Channel.
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.