The 5G rollout is continuing and that’s a boon for ETFs, such as the First Trust Indxx NextG ETF (NXTG), which hit an all-time high on Monday.
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 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.
Now for NXTG
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.
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.
Eligible securities must have a minimum market capitalization of $500 million, the six-month average daily trading volume of at least $2 million ($1 million for emerging market companies), traded for at least 90% of the total trading days in the last six months or for a security recently issued in an initial public offering over the prior three months, a minimum free float of 10% of shares outstanding and a share price of less than $10,000 for new index constituents.
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 5G rollout is expected to be massive and present investors with significant opportunities, that underscores the case for ETFs such as NXTG.
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.”
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.