Which 5G ETF to Invest In

As we’ve written about time and time again, the next big opportunity for investors will be in the form of a digital network.

The fifth-generation network, to be more specific.

5G is expected to become a $277 billion industry by 2025, growing at an annual rate of more than 100%.

Most of our data traffic occurs on fourth-generation (4G) mobile networks. But 5G wireless broadband is the next frontier.

With accelerating data usage and increasingly connected technologies on the horizon, the need for a faster and more robust mobile network will have to be met.

The Promise of 5G

Currently, the max speed for 4G networks is about 150 megabits per second (Mbps). For the latest 4G LTE networks (basically, 4G plus), the max speed is closer to 1 gigabit per second (Gbps).

Again, that’s just the max speed. The average broadband speed is typically lower.

To compare, 5G networks promise to be up to 100 times faster than 4G, with speeds of around 10 Gbps…

Chart - 5G 100X Faster

Of course, that means we can enjoy more reliable high-definition video streaming and faster internet. But we’ll be also able to support the wireless connectivity needs of future technologies in the emerging Internet of Things.

And that’s not all.

5G also opens up access to higher broadband spectrum ranges that we’re not currently using. This means less competition for wireless service and a much more flawless user experience.

For example, have you ever noticed how unreliable your wireless network becomes when in a highly crowded area? Or how slow your internet becomes when more people are using the Wi-Fi?

It’s because the network has a limited capacity, so everyone’s competing for broadband usage. But access to higher bands will solve those problems.

In fact, earlier this month, the Federal Communications Commission (FCC) conducted its largest auction of millimeter wave spectrum in history.

Following the auction, FCC Chairman Ajit Pai said, “Today’s spectrum auction shows that America is continuing to lead the world in 5G, the next generation of wireless connectivity. These airwaves will be critical in deploying 5G services and applications.”

Profiting On the 5G Revolution

Many major telecommunication companies are amping up their research and development in 5G to carve out a dominant position in the market.

There are a number of companies that could directly or indirectly benefit from the race to 5G. But one of the simplest ways to profit is with a thematic exchange-traded fund (ETF).

For example, consider the First Trust Indxx NextG ETF (Nasdaq: NXTG), which is a diversified ETF that focuses on companies with material exposure to 5G technology…

The ETF gained more than 27% in 2019. And it presents a great buying opportunity for investors…

Chart - First Indxx

Some big names being tracked by this ETF include Advanced Micro Devices (Nasdaq: AMD), Qualcomm (Nasdaq: QCOM) and Cisco Systems (Nasdaq: CSCO) – up 127%, 54% and 8% year to date, respectively.

Other big holdings include companies like data center giant Equinix (Nasdaq: EQIX), up 60%, and Keysight Technologies (NYSE: KEYS), up 68% year to date.

Investors should consider buying an ETF like this one to either make a broad bet on the industry or make targeted bets on individual players in the space.

Good investing,

Profit Trends Research Team

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