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5G ETFs: Invest in the Next Generation Wireless Technology

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In this episode of ETF Spotlight, I talk with Paul Dellaquila, Global Head of ETFs at Defiance. We discuss the fifth generation wireless technology or 5G, and related ETFs.

The International Telecommunication Union (ITU), a UN body, has a set of requirements for the technology. It should offer download speeds of at least 20 gigabits per second, response times or “latency” of less than 1 millisecond and the ability to connect at least 1 million devices in one square kilometer. So, we may be on the brink of a communications revolution as 5G could change the way we live, work, travel and communicate.

Major telecom companies have just started rolling out 5G service in very limited areas. Verizon (VZ) enabled the service last month in parts of Chicago and Minneapolis. AT&T (T - Free Report) has started 5G service trials in parts of 19 cities. Sprint (S) plans to launch the service in nine cities by the end of this quarter.

Samsung (SSNLF) was among the first phone makers to introduce a 5G smartphone. Apple (AAPL) settled its multiyear legal dispute with Qualcomm (QCOM) recently, so we could see a 5G iPhone next year.

We discuss the current status of deployment of the technology. The technology will have an enormous impact when it becomes mainstream. We talk about the 5G value chain.

The Defiance Next Gen Connectivity ETF (FIVG) is the first ETF focused exclusively on companies involved in research, development and usage of 5G technology. Its top holdings include CommScope (COMM), Xilinx (XLNX) and Skyworks (SWKS).

US wants to be a leader in the space and China had identified 5G as a “strategic emerging industry” in its Five Year Plan. However, theChinese telecom giant Huawei, which plans to launch a $600 5G phone and the world's first 5G TV later this year, is privately held.

The technology will provide a big boost to the Internet of Things, self-driving cars, and virtual/augmented reality technologies. We discuss the Defiance Future Tech ETF (AUGR), which focuses on companies involved in virtual and augmented reality technologies.

Another ETF—the First Trust NASDAQ Smartphone Index Fund (FONE)—will change its focus on May 29, and track companies involved 5G and next generation cellular technologies.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email

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