Market Overview

The First 5G ETF Arrives

The First 5G ETF Arrives

The first exchange traded fund dedicated to 5G telecommunications phenomenon debuted Tuesday with the launch of the Defiance Next Gen Connectivity ETF (NYSE: FIVG).

The new ETF follows the BlueStar 5G Communications Index. BlueStar serves as the index provider for several other ETFs, including the Defiance Future Tech ETF (NYSE: AUGR).

What Happened

“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,” according to a statement from Defiance ETFs.

FIVG's industry allocations span eight groups, including radio access network equipment makers, cloud-core firms, mobile network providers, satellite operators and real estate companies with 5G exposure, among others.

Why It's Important

Ten countries are represented in the new FIVG, but the U.S. accounts for more than 78 percent of the ETF's geographic exposure. Finland and Sweden combine for 10 percent. FIVG's top 10 holdings range in weights from 3.10 percent to 6.18 percent.

That group includes Xilinx Inc. (NASDAQ: XLNX), Skyworks Solutions Inc. (NASDAQ: SWKS), Nokia Corp. (NYSE: NOK) and Ubiquiti Networks Inc. (NASDAQ: UBNT).

“In our view, 5G will likely be the engine behind smart cities, augmented reality, remote virtual robotics surgery, autonomous vehicles and quantum computing, which we expect to roll out in 2019,” said Defiance CEO Matthew Bielski in the statement.

FIVG charges 0.30 percent per year, or $30 on a $10,000 investment, making the fund favorably priced among thematic ETFs.

What's Next

Applications for 5G are numerous and the opportunity set for investors as 5G rollouts continue around the world is potentially substantial as well.

“From smart care to augmented reality/virtual reality functions; frommanufacturing to the automotive industry to medicine and healthcare, theimpact of 5G could be felt across many spheres, including Enhanced MobileBroadband (EMBB), Massive Internet of Things (MIoT) and Mission CriticalServices (MCS),” according to Defiance.

Defiance ETFs also sponsors the Defiance Quantum ETF (NYSE: QTUM).

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