Which 5G ETF to Invest In
The trade war between the U.S. and China has been looming over the stock market for some time now, and it’s reaching a fever pitch.
But a key battleground in that war is presenting an opportunity for investors.
I’m talking about the global race for fifth-generation (5G) dominance.
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
Again, that’s just the max speed. The average broadband speed is typically lower.
(For example, I just checked my internet speed and it’s clocking in at about 94 Mbps.)
To compare, 5G networks promise to be up to 100 times faster than 4G, with speeds of around 10 Gbps.
Of course, that means we can enjoy more reliable high-definition video streaming and faster internet. But we’ll also be 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.
Currently, most networks operate below the 6 gigahertz (GHz) spectrum. But 5G can go as high as 30 GHz (and possibly 300 GHz, in theory).
In fact, in January, the Federal Communications Commission (FCC) completed its auction of the 28 GHz spectrum for gross bids of more than $700 million.
And later this year, the FCC will be auctioning more high-band spectrum for use by 5G network providers.
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 20% in the first four months of 2019. And while it dipped in price last month, it has since rebounded and presents a good buying opportunity for investors.
Some big names being tracked by this ETF include Advanced Micro Devices (Nasdaq: AMD), Cisco Systems (Nasdaq: CSCO) and Qualcomm (Nasdaq: QCOM) – up 65%, 30% and 26% year to date, respectively.
Other big holdings include companies like data center giant Equinix (Nasdaq: EQIX), up 45%, and Keysight Technologies (NYSE: KEYS), up nearly 40% year to date.
Investors can 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.
P.S. Interested in more trending ETFs? The Oxford Club’s very own ETF Strategist Nicholas Vardy has a trading service full of them.
His Oxford Wealth Accelerator recommends ETFs based on today’s hottest investment strategies, sectors and regions.
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