As capital markets were wary if technology can sustain its growth in the late innings of an extended bull run in 2019, it’s been more of the same and 2020 could bring even more digital dominance. This is especially the case for disruptive technologies like 5G, artificial intelligence and robotics, says Mark Haefele, chief investment officer at UBS Global Wealth Management
“Haefele thinks 5G mobile phones, artificial intelligence, big data, and cloud computing will define the digital transformation of the coming decade,” a Barron’s article said. “He noted that 5G networks are being rolled out across the world, which will in turn contribute to the development of the Internet of Things. How this all interacts and develops will create investing opportunities in digital data, enabling technologies, e-commerce, fintech, health technology, and security and safety, according to Haefele.”
5G Technology Rollout
One fund to consider is the 5G ETF (FIVG) from Defiance ETFs, which carries an expense ratio of 0.30%. Investors who missed out on the serendipitous run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks can look to capitalize on disruptive tech options in 2019 like 5G technology.
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.
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 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.
Digital Disruption in One ETF
For investors who missed out on the bull market run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks, they can look to capitalize on disruptive tech options in 2019 and beyond that–one of those being the ARK Innovation ETF (NYSEArca: ARKK).
ARKK seeks to provide investors with:
- Exposure to Innovation: Aims for thematic multi-cap exposure to innovation across sectors.ARK believes the securities held in ARKK present the best risk-reward opportunities from ARK’sinnovation-based themes.
- Growth Potential: Aims to capture long-term alpha+ with low correlation of relative returns totraditional growth strategies and negative correlation to value strategies.
- Diversification: Offers a tool for diversification due to little overlap with traditional indices.It can be a complement to traditional value/growth strategies.
- Research:Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.
- Cost Effectiveness: Provides a lower cost alternative to mutual funds with true active management in an Exchange Traded Fund (ETF) that invests in rapidly moving themes.
For more market trends, visit ETF Trends.