The technology side of the real estate industry is decidedly more compelling than other groups in the sector, but some cell tower stocks are catching up with pure tech names. The Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR) is likely to benefit in significant fashion.
The Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF is a strategy-driven ETF that aims to offer investors exposure to U.S. companies that generate the majority of their revenue from real estate operations in the data and infrastructure sectors. There are significant real estate demands associated with the 5G rollout, enhancing the 5G ETF status of the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF.
SRVR is home to cell tower REITs, data center REITs, and similar facilities – these cell towers and data processing centers store the information and handle the orders that start the e-commerce process, making the fund a diverse play on some of the most important emerging technological themes.
“Fifth-generation wireless is still in the early stages, with penetration at just 4% in North America. It’s expected to reach 17% in 2021 and 37% by 2022, according to Morgan Stanley,” reports Daren Fonda for Barron’s. “For data centers, information-technology budgets are expected to grow 1.4% in 2021 after contracting 2.5% in 2020. Mobile-data usage is rising at a 30% annualized clip, and telecom companies AT&T (ticker: T), Verizon Communications (VZ), and T-Mobile US (TMUS) are boosting their capital spending.”
A 5G Investing Opportunity
With a heavier reliance on technology, the need for faster download speeds is becoming increasingly apparent. More infrastructure is necessary to support the rollout of 5G technology.
SRVR offers investors an alternate play on commercial real estate. It sidesteps commercial property-focused REITs that are having to navigate an environment where work-from-home culture is supplanting the need for office space.
“Cell towers, which rent space for antennas and other wireless equipment, should be long-term beneficiaries of the 5G rollout. Telecom companies just spent $95 billion on auctions for wireless spectrum known as C-band. They’ll need to upgrade antennas, radios, and other equipment, starting a new growth cycle for the tower companies,” adds Barron’s.
SRVR, which yields 1.57%, is up 1% to start 2021.
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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.