Investing

Here Are The Best 5G ETF’s

Each year there are a few trends that investors watch closely and that often take off incredibly. This year it’s 5G or fifth generation technology. With the onslaught of so many smart devices using up the Wi-Fi network, 5G is a way for the telecom sector to keep up with the demand for superior service. 

While you could invest in individual companies offering 5G, that’s risky. To offset the risk, you could invest in ETFs or exchange traded funds which are baskets of securities meant to offset the risk of a single stock.

So what are the best 5G ETFs thus far? Here are our favorites.

Vanguard Communication Services

If you want a taste of every large telecom provider out there, check out the Vanguard Communication Services ETF (VOX). 

It’s one of the easiest ways to get your hands on 5G investments without investing in the companies directly. We like the Vanguard ETF because of its low expense ratio (0.1%) and incredible exposure to the largest names like Comcast, Verizon, and Google. 

The need for expanded data services is only going to increase. If you jump into the investment now, you’ll be on the starting end of something that promises to be big.  

Defiance Next Gen Connectivity ETF

The Defiance Next Gen ETF is one of the largest 5G ETFs available today. It has 75 holdings, most of which are leaders in 5G including Qualcomm and NXP Semiconductors. It’s one of the better investments for beginners looking to dip their toes into the 5G success at a low expense ratio of 0.3%.

First Trust Indxx NextG ETF

First Trust isn’t one of the larger ETFs out there, but it holds its own with a $700 million valuation. It focuses on hardware manufacturers that telecom companies need to produce 5G, so it’s an integral component of the industry. It includes corporations like Xiaomi Corp and Qualcomm among others. It has an 0.7% expense ratio and has big promise despite its lesser known name.

Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR)

Two integral components of 5G data are data centers and cell towers, so it makes sense to invest in ETFs that coincide with both. The fund is about 50/50 data center stocks and cell tower stocks and includes big names like Equinix, American Tower Corporation, and Crown Castle International. The ETF has a 0.6% expense ratio and 18 total holdings.

Global X Internet of Things ETF

Of course, the internet wouldn’t be worth anything without ‘things’ to connect to it. That’s exactly what the Global X Internet of Things ETF invests in – things like smartphones, smartwatches, and more.

This fund focuses on the end user, which you know there will be plenty of especially when streaming rates come in faster than ever before. The SNSR ETF has a 0.68% expense ratio.

Why Invest in 5G ETFs?

Besides the potential for returns, there are several reasons to consider investing in 5G ETFs.

  • 5G promises quicker download and streaming rates, which is great for all internet uses, but especially gaming. Since the pandemic, almost half of gamers said they play even more now they’re mostly homebound, making 5G an integral part of their success.
  • 5G towers should have less congestion than 4G LTE. Even though 4G LTE promised lightning quick speeds and fewer dead zones, it still happened more than users would like. 5G with its faster downloads and shorter wavelengths promises less congestion and therefore more value.
  • 5G opens up more doors for technological advances. Certain apps and technological developments couldn’t happen because 4G LTE couldn’t handle it. The advancement of 5G not only makes them possible but increases the speed of tasks most users already do, such as watching movies and streaming games. 

Should you Invest in 5G ETFs?

5G ETF's can be a great way to ride the investment wave.

Adding 5G ETFs to your portfolio allows you to diversify into the technological industry while taking advantage of a new and upcoming advancement. Before you invest in an ETF, make sure you’re aware of the expense ratio. Not all expense ratios are as low as the ETFs we mentioned above.

Expense ratios can decrease your profits quickly if you aren’t careful. Do your due diligence, understanding not only what investments are in the ETF, but also what it will cost. This will help you choose the right investments to include in your portfolio.