Two ETFs to Capitalize on Singapore's 5G Rollout in 2020

Singapore hopes to be in the forefront of 5G technology in the year 2020 by rolling out an aggressive plan to incorporate the technology as part of its digital economy. This will open up opportunities for ETF investors who know where to look as far as funds go–namely the iShares MSCI Singapore ETF (NYSEArca: EWS) and the Defiance 5G Next Gen Connectivity ETF (NYSEArca: FIVG).

In addition to adding the initial phased of 5G by 2020, Singapore has even deeper plans for integration. Per a CNBC report, the “country’s telecommunication regulator, Infocomm Media Development Authority (IMDA), announced Thursday that at least 50% of the city-state will be covered with a standalone 5G network by the end of 2022.”

“What we have emphasized is the need for resilience in our system, vendor diversity, and also ensuring that the system meets our security requirements,” Singapore Minister for Communications and Information S Iswaran told CNBC. “Those specifications would be spelt out clearly and then the operators would have to, in their proposal, ensure that these are well met in order to qualify.”

EWS and FIVG Opportunities

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 for Singapore.

EWS seeks to track the investment results of the MSCI Singapore 25/50 Index, which is designed to measure the performance of the large- and mid-cap segments of the Singapore market. A capping methodology is applied that limits the weight of any single component to a maximum of 25% of the underlying index.

FIVG seeks to track the total return performance of the Bluestar 5G Communications Index (the index). The fund uses a passive management approach to track the total return performance, before fees and expenses, of the index.

The index consists of a tiered, modified market capitalization-weighted portfolio of the U.S.-listed equity securities, including depositary receipts, of companies whose products or services are predominantly tied to the development of 5G networking and communication technologies. At least 80% of the fund’s total assets will be invested in the component securities of the index.

The latest IMD’s 2019 World Competitiveness Rankings saw Singapore surpass the United States to claim the title of the world’s most competitive economy. According to Switzerland-based business school IMD, Singapore’s immigration laws, advanced technological infrastructure, availability of skilled labor and efficient ways to set up new businesses helped it reach the top.

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