The 5G ETF (FIVG), which debuted in March, already has $81.73 million in assets under management, making it one of this year’s most successful new exchange traded funds. FIVG’s rapid success underscores the viability of the 5G investment theme.
The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. FIVG does this by tracking The BlueStar 5G Communications Index, and FIVG attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.
“5G is significant because it brings three compelling benefits: faster data speeds, lower latency, and increased connectivity,” said IHS Markit in a recent note. “And what couldn’t be done with older technology will now be possible as 5G enables altogether new use cases; examples include driverless cars, immersive entertainment and virtual reality with zero delay, uninterrupted video, and gaming with practically no latency. On the industrial front, 5G will be key to expanding and realizing the full promise of the Internet of Things (IoT), with the technology’s impact to be felt in smart homes, smart cities, and smart industries.”
5G: The Next Big Thing
5G technology will use a higher frequency band versus the current 4G technology standard, resulting in faster transmission of data. Being able to transmit copious amounts of data at a faster rate is certainly of benefit for wireless companies and their users, but 5G could be a major disruptor in various industries.
The possible applications of 5G technologies are only in the exploration stages, and the possibility of returns is uncertain and may not be realized soon. Nonetheless, it presents an opportunity that could see early adopters reap the benefits, especially if the technology is utilized to its fullest capabilities.
“Even so, the full range of planned 5G capabilities will not be available during initial launches,” according to Markit. “In fact, many key features most frequently associated with 5G—such as ultra-reliable low-latency communications (URLLC)—won’t be ready within the next 18 months. Instead, the wider range of 5G capabilities will unfold in a phased approach over the next few years.”
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