Best 5G ETFs Right Now

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Contributor, Benzinga
Updated: May 25, 2021

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Short for “5th generation,” 5G is the next major standard for broadband cellular networks. Cell phone companies that can support a 5G network will be able to provide their customers with enhanced bandwidth. Eventually, experts estimate that 5G networks can provide customers with download speeds of up to 10 gigabits per second. Telecommunications companies are predicting positive trends for 5G technology following the COVID-19 pandemic, with up to 1.7 billion subscribers worldwide by the year 2025.  

An exchange-traded fund (ETF) is a “basket” of securities that trades on the stock market in the same way as a regular share of stock. You can purchase ETFs throughout the day, which makes them distinct from mutual funds. ETFs usually have a theme that guides the percentages of stocks included in the ETF. Investing in a 5G ETF provides you with exposure to the emerging 5G market with less risk than investing in individual stocks.

Are you interested in learning more about adding a 5G ETF to your investment portfolio? Our guide will introduce you to a few of the top ETFs in the 5G sector, as well as a few of our favorite brokers that can help you access the market quickly. 

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5G ETFs Biggest Gainers and Losers

Keeping track of how 5G stocks and the market is moving can help you buy your 5G ETF at the most advantageous time. Browse a quick list of the top gainers and losers in the 5G sector below.  

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Why Invest in 5G ETFs?

Investing in the emerging 5G market can potentially provide investors with plenty of opportunity for returns. Let’s take a look at a few of the biggest benefits that may come with investing in 5G technology.

  • 5G technology can better support gaming capabilities. If you’ve been playing more video games since the onset of the COVID-19 pandemic and nationwide stay-at-home orders, you’re certainly not alone. According to research published by Nielson Games, about 46% of gamers in the U.S. said that they were playing more video games since the start of the COVID-19 pandemic. Gamers are using more gaming content, with projections showing it will grow to 474 million users in 2021 and $577.3 million by 2024.

One of the primary benefits of 5G technology is faster download speeds and streaming rates. As the effects of the COVID-19 pandemic continue to ripple worldwide, it’s possible that mobile gamers will clamor to snatch up 5G tech as it continues to become more widely available.

  • 5G technology will likely show lower tower congestion. If you experience slow speeds on a 4G LTE network, it’s typically because there are too many users on the network for the tower to support. The next-gen networks will largely eliminate this problem, mostly because 5G towers show faster download speeds and use shorter wavelengths to deliver content to users. This means that users won’t need to compete with one another when using 5G to stream, surf and download.
  • 5G could enable new technology options for apps and mobile devices. This technology won’t only make streaming movies and playing video games easier — it can make it possible to enhance mobile tech to accommodate services that cannot be supported by 4G LTE services. Widespread 5G technology can enhance retail artificial reality (AR) and virtual reality options for mobile users. 

Five 5G ETFs by AUM

Now that you understand some of the benefits that may come with investing in the realm of 5G technology, let’s take a look at a few of the largest ETFs that include holdings of companies that are investing in 5G infrastructure. We’ve organized our top choices by assets under management (AUM), with larger ETFs listed first.

1.    Vanguard Communication Services ETF (NYSE: VOX): With over $3.16 billion in AUM, the Vanguard Communication Services ETF is the largest telecom ETF currently investing in 5G companies. Some of the company’s largest 5G holdings include investments in Verizon Communications (NYSE: VZ), the Comcast Corporation (NASDAQ: CMCSA) and AT&T (NYSE: T). Other major holdings include Facebook (NASDAQ: FB) and Google’s parent company Alphabet (NASDAQ: GOOG). With widespread investments in some of the largest tech companies in the U.S., this ETF can provide you with a diverse range of exposure to the 5G market and beyond.

2.    Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE: SRVR): As 5G networks continue to expand, more data storage and tech real estate will be needed to meet the growing data demands of consumers. The Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF invests primarily in companies that earn their money providing real estate services and commercial rental spaces to telecommunications and data storage providers. Some of its largest holdings are in the Crown Castle International Corporations (NYSE: CCI) and the American Tower Corporation (NYSE: AMT). The majority of holdings in this ETF are structured as real estate investment trusts (REITs), which tend to pay out higher dividends than competing investments in the technology sector.

3.    First Trust Indxx NextG ETF (NASDAQ: NXTG): Though First Trust is more widely known for its smaller ETF offerings, the Indxx NextG ETF currently holds over $728 million in AUM. The majority of the fund’s holdings are in international hardware manufacturers producing microchips and other essential components required to support 5G technology on the individual level. Major inclusions range from American microchip manufacturer Qualcomm (NASDAQ: QCOM) to Chinese smartphone manufacturer Xiaomi (OTC: XIACF).

4.    Defiance Next Gen Connectivity ETF (NYSE: FIVG): The Defiance Next Gen Connectivity ETF focuses on investing in companies producing technology that will power 5G providers to distribute services. Hardware companies make up about 75% of the fund’s AUM, which sets the ETF apart from competitors like the Vanguard Communication Services ETF, which focuses mainly on software manufacturers. Many of its holdings intersect with the First Trust Indxx NextG ETF.

5.    Global X Internet of Things Thematic ETF (NASDAQ: SNSR): The “internet of things” is a phrase that describes a network of objects that are connected together through the internet —  a thermostat you can control using your phone, for example. If you’re more interested in investing in companies that produce products that will use 5G technology, consider this ETF. Major holdings are in companies that produce GPS systems and wireless communications solutions. 

Best Online Brokers for 5G ETFs

No matter if you’re investing in 5G ETFs you plan to hold in your portfolio for years or if you’re searching for penny stocks to day trade, investing begins by opening an account through your broker. Don’t already have a brokerage account? Consider a few of our top picks below.  

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Adding 5G Technology to Your Portfolio

As 5G continues to expand, adding a 5G ETF to your portfolio provides you with a unique blend of exposure to a developing technology and diversification. If you decide to invest in ETFs, we recommend that you know the expense ratio that comes with owning each fund. If you’re looking for the lowest expense ratio possible, be sure to consider the Vanguard Communication Services ETF, which boasts an exceptionally affordable expense ratio of 0.10%.