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5G, the next era of smarter, faster and more efficient wireless technology, has lately picked up pace. The initial round of rollouts has been gaining steam globally. It is operational in many major cities in the United States, as well as places in China, South Korea and the United Kingdom, among other countries.
Carriers are busy building foundations. China Mobile and Huawei, in fact, jointly deployed 5G connectivity at the summit of Mount Everest lately. Phone-makers have also started launching 5G-enabled handsets. Notably, Samsung’s new phone will be the cheapest 5G phone in the United States when it will hit the market on Jun 19.
If this was not enough, Trump administration’s latest $1-trillion stimulus plan has reportedly earmarked a fund for developing 5G infrastructure. The draft proposal shows the latest effort by the U.S. government to revive the coronavirus-ravaged economy. A Deloitte Study shows that 76% of executives believe 5G will be a "critical" networking technology for their company in three years, and 70% feel the same way about Wi-Fi 6.
Investors should note that apart from faster usage of mobile networks, 5G is going to strengthen the mechanism of the growing Internet of Things (IoT) so that a human-to-object interaction can be set up smoothly. “From smart care to augmented reality/virtual reality functions, from manufacturing to the automotive industry to medicine and healthcare, the impact of 5G could be felt across many spheres, including Enhanced Mobile Broadband (EMBB), Massive Internet of Things (MIoT) and Mission Critical Services (MCS),” industry experts.
Is There Any Adverse Impact on 5G Due to CoVID-19?
The COVID-19 pandemic is not hurting 5G subscriptions meaningfully. The subscription should double in 2020 in China. North America and Europe may see moderate pickup though. The Swedish networking behemoth Ericsson, in its biannual mobility report released lately, indicated that by the end of the year, there will be 190 million 5G subscriptions globally. In November, it had predicted 100 million.
By the end of 2025, the number of 5G users globally should shoot up to 30% of all mobile subscriptions at that time, or about 2.8 billion. That's up from the 2.6 billion expected in the previous report of Ericsson.
Is theUS-Huawei Relation Improving?
In the height of U.S.-China trade war, the Trump administration banned U.S. firms from providing supplies to the Chinese technology giant. So, relation between the United States and Huawei is crucial in the deployment and evolvement of the 5G network. Most recently, the U.S. Department of Commerce said that U.S. firms can work with Huawei on setting standards for next-generation technologies. Notably, standards are critical to technologies to ensure seamless usage of Wi-Fi in various parts of world.
The underlying index of the fund – the BlueStar 5G Communications Index – is a rules-based index that tracks the performance of a group of U.S.-listed stocks, of global companies that are involved in the development of, or are otherwise instrumental in the rollout of 5G network. As far as geographical categorization is concerned, the fund has about 70% exposure to the United States. It charges 30 bps in fees.
Pacer Benchmark Data & Infrastructure Real Estate Sector ETF (SRVR - Free Report)
Before the positioning of 5G, the buildup of its infrastructure is required. Along with some other analysts, we too believe that the efforts could be tapped by investing in SRVR. The underlying Benchmark Data & Infrastructure Real Estate SCTR Index comprises the U.S. listed equity securities of companies that derive at least 85% of their earnings or revenues from real estate operations in the data and infrastructure real estate sectors. It charges 60 bps in fees.
The fund tracks the performance of the Indxx Disruptive Technologies Index. The index identifies companies using disruptive technologies in each of the 10 thematic areas: Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments. The fund charges 50 bps in fees.
The underlying Indxx 5G & NextG Thematic Index tracks the performance of companies engaged in the smartphone segment of the telecom and technology sectors. The fund charges 70 bps in fees.
Global X MSCI China Communication Services ETF
The underlying MSCI China Communication Services 10/50 Index follows a rules-based methodology that is designed to select constituents of the MSCI China Index. The fund charges 66 bps in fees.
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5G Gaining Immense Traction: ETFs to Bet On
5G, the next era of smarter, faster and more efficient wireless technology, has lately picked up pace. The initial round of rollouts has been gaining steam globally. It is operational in many major cities in the United States, as well as places in China, South Korea and the United Kingdom, among other countries.
Carriers are busy building foundations. China Mobile and Huawei, in fact, jointly deployed 5G connectivity at the summit of Mount Everest lately. Phone-makers have also started launching 5G-enabled handsets. Notably, Samsung’s new phone will be the cheapest 5G phone in the United States when it will hit the market on Jun 19.
If this was not enough, Trump administration’s latest $1-trillion stimulus plan has reportedly earmarked a fund for developing 5G infrastructure. The draft proposal shows the latest effort by the U.S. government to revive the coronavirus-ravaged economy. A Deloitte Study shows that 76% of executives believe 5G will be a "critical" networking technology for their company in three years, and 70% feel the same way about Wi-Fi 6.
Investors should note that apart from faster usage of mobile networks, 5G is going to strengthen the mechanism of the growing Internet of Things (IoT) so that a human-to-object interaction can be set up smoothly. “From smart care to augmented reality/virtual reality functions, from manufacturing to the automotive industry to medicine and healthcare, the impact of 5G could be felt across many spheres, including Enhanced Mobile Broadband (EMBB), Massive Internet of Things (MIoT) and Mission Critical Services (MCS),” industry experts.
Is There Any Adverse Impact on 5G Due to CoVID-19?
The COVID-19 pandemic is not hurting 5G subscriptions meaningfully. The subscription should double in 2020 in China. North America and Europe may see moderate pickup though. The Swedish networking behemoth Ericsson, in its biannual mobility report released lately, indicated that by the end of the year, there will be 190 million 5G subscriptions globally. In November, it had predicted 100 million.
By the end of 2025, the number of 5G users globally should shoot up to 30% of all mobile subscriptions at that time, or about 2.8 billion. That's up from the 2.6 billion expected in the previous report of Ericsson.
Is theUS-Huawei Relation Improving?
In the height of U.S.-China trade war, the Trump administration banned U.S. firms from providing supplies to the Chinese technology giant. So, relation between the United States and Huawei is crucial in the deployment and evolvement of the 5G network. Most recently, the U.S. Department of Commerce said that U.S. firms can work with Huawei on setting standards for next-generation technologies. Notably, standards are critical to technologies to ensure seamless usage of Wi-Fi in various parts of world.
ETFs in Focus
Defiance Next Gen Connectivity ETF (FIVG - Free Report)
The underlying index of the fund – the BlueStar 5G Communications Index – is a rules-based index that tracks the performance of a group of U.S.-listed stocks, of global companies that are involved in the development of, or are otherwise instrumental in the rollout of 5G network. As far as geographical categorization is concerned, the fund has about 70% exposure to the United States. It charges 30 bps in fees.
Pacer Benchmark Data & Infrastructure Real Estate Sector ETF (SRVR - Free Report)
Before the positioning of 5G, the buildup of its infrastructure is required. Along with some other analysts, we too believe that the efforts could be tapped by investing in SRVR. The underlying Benchmark Data & Infrastructure Real Estate SCTR Index comprises the U.S. listed equity securities of companies that derive at least 85% of their earnings or revenues from real estate operations in the data and infrastructure real estate sectors. It charges 60 bps in fees.
ALPS Disruptive Technologies ETF (DTEC - Free Report)
The fund tracks the performance of the Indxx Disruptive Technologies Index. The index identifies companies using disruptive technologies in each of the 10 thematic areas: Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments. The fund charges 50 bps in fees.
First Trust Indxx NextG ETF (NXTG - Free Report)
The underlying Indxx 5G & NextG Thematic Index tracks the performance of companies engaged in the smartphone segment of the telecom and technology sectors. The fund charges 70 bps in fees.
Global X MSCI China Communication Services ETF
The underlying MSCI China Communication Services 10/50 Index follows a rules-based methodology that is designed to select constituents of the MSCI China Index. The fund charges 66 bps in fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>