Undaunted by the coronavirus pandemic, the 5G rollout continues around the world and there are signs of investors being rewarded for their faith in this theme. Over the past month, the Defiance 5G Next Gen Connectivity ETF (NYSEArca: FIVG) is higher by almost 13% and hit a record high last Friday.
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.
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.
“We believe investors should take a longer term view by focusing on financially sound companies who are leading the way in this 5G rollout,” says Paul Dellaquila, President of Defiance ETFs. “5G will be the driver behind our new virtual economy and remote connectivity and there is a significant organic growth behind this revolution.”
FIVG offers investors liquid, transparent, and low-cost access to companies engaged in the research & development or commercialization of systems and materials used in 5G communications. The underlying BlueStarGlobal 5G Communications Index tracks approximately 60 globally-listed stocks across all market capitalizations, with special weighting given to large caps (71%.) It uses a tiered weighting system that divides upholdings.
“The fund just recently surpassed its first year of trading and has already taken in over $300 million in assets, marking it one of the most successful thematic ETF launches in recent years from an independent fund issuer,” according to Defiance ETFs.
FIVG is the original ETF dedicated to 5G investing and costs just 0.30% per year, 40 basis points less than the copycat fund in the category. Plus, FIVG is outpacing its rival in terms of total returns.
“Of course, those traits don’t make investors money. The case for FIVG, which is up 20% over the past year, is its broad reach into an array of industries with credible 5G exposure. Those include gear manufacturers, handset makers, network operators, and semiconductor producers, among others,” according to InvestorPlace.
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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.