What's Driving This Internet of Things ETF to Over 20% YTD?

It’s not over-concentrated holdings in Google, Facebook, or Twitter that’s driving gains for the Global X Internet of Things ETF (SNSR), which is up over 20% on the year.

One of the reasons could be the trillion-dollar infrastructure bill that was recently signed into law by U.S. president Joe Biden. The bill-turned-law will include provisions to provide funding for building out internet infrastructure.

“The $65 billion allocated to broadband expansion as part of the Biden administration’s $1 trillion infrastructure bill could change all that with improved internet services for rural areas, low-income families and tribal communities,” MarketWatch reports. “It gives advocates what they have long wanted: Money to build out internet infrastructure to areas lacking access, and subsidies to Americans who cannot afford high-speed internet service.”

SNSR seeks to invest in companies that stand to potentially benefit from the broader adoption of the internet of things (IoT), as enabled by technologies such as Wi-Fi, 5G telecommunications infrastructure, and fiber optics. This includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet. The fund offers investors:

  • High growth potential: SNSR enables investors to access high growth potential through companies at the leading edge of the IoT and related technologies like 5G, which are transforming how humans interact with tech-enabled devices and how those devices interact with each other.
  • An unconstrained approach: SNSR’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
  • ETF efficiency: In a single trade, SNSR delivers access to dozens of companies with high exposure to the IoT theme.

SNSR Chart

A One-Two Punch Combo for SNSR

As mentioned, investors won’t find tech’s heavy hitters dominating the holdings of SNSR. Taking a closer look under the hood, what’s helping to propel the fund is a one-two punch combination that comprises about 14% of the fund (as of December 9).

STMicroelectronics and DexCom might not be household names to the general investing audience, but they might as well be given their combined effort in propelling SNSR. The former focuses on electronics and semiconductor manufacturing, while the latter focuses on developing medical devices — STMicroelectronics stock is up 30% year-to-date, and DexCom is up over 50%.

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