The 5G revolution is here, and that means it’s time to buy 5G stocks and 5G ETFs.
Because this next-generation technology is on the cusp of forever changing the world.
You see, 5G isn’t just a “level up” from 4G and LTE connectivity. It’s a whole new ball game. 5G will be 100 times faster than 4G. It will decrease end-to-end latency by 10-fold. And it will increase network traffic capacity by 100x.
In other words, going from 4G to 5G is like going from horses to cars, or from hot air balloons to airplanes.
And just as the transition to cars and airplanes opened up a world of infinite possibilities, so, too, will the transition to 5G.
Self-driving cars. Immersive reality. Edge computing. Connected factories. Advanced robotics. All of it will be made possible because of 5G.
Needless to say, this is a once-in-a-lifetime investment revolution that you don’t want to miss.
With that in mind, here are the five best 5G ETFs to buy to play the 5G boom:
- Defiance Next Gen Connectivity ETF (NYSEARCA:FIVG)
- First Trust Indxx NextG ETF (NASDAQ:NXTG)
- Global X Internet of Things Thematic ETF (NASDAQ:SNSR)
- Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSEARCA:SRVR)
- SPDR S&P Telecom ETF (NYSEARCA:XTL)
Best 5G ETFs: Defiance Next Gen Connectivity ETF (FIVG)
Expense Ratio: 0.3%, or $30 on an initial $10,000 investment
First up on this list of 5G ETFs to buy to play the 5G boom is the Defiance Next Gen Connectivity ETF, which is just a very straightforward play on all things 5G.
The ETF itself has 75 holdings, making it one of the larger 5G ETFs by number of holdings. But it’s highly concentrated at the top. Specifically, four companies which are considered the leaders in 5G technology and infrastructure — Qualcomm, NXP Semiconductors (NASDAQ:NXPI), Analog Devices (NASDAQ:ADI) and Ericsson (NASDAQ:ERIC) — account for about 20% of the fund’s portfolio.
Of note, the expense ratio is 0.3%, which is as cheap as it gets for 5G ETFs.
Big picture: FIVG offers investors a highly concentrated pure-play investment into the leaders of the 5G revolution, at a very low cost. This ETF is ideal for low-risk investors looking for low-cost exposure to the 5G megatrend.
First Trust Indxx NextG ETF (NXTG)Expense Ratio: 0.7%
Next up on this list of 5G ETFs to buy is the First Trust Indxx NextG ETF.
Formerly a smartphone ETF, the First Trust Indxx NextG ETF has transformed into a 5G ETF that offers investors a very broad, very diversified way to play the 5G boom.
The ETF has 100 holdings, which is about as many holdings as you are going to find in a 5G ETF. None of those holdings comprise more than a 2% portfolio allocation. Most of them are 5G infrastructure and components companies along the lines of Qualcomm, NXP, Analog, Ericsson and Nokia (NYSE:NOK). Diversified semiconductor names like Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) are also among the fund’s holdings. All of them have between 1%-2% allocations.
The expense ratio on the NXTG ETF is on the high side at 0.7%.
Big picture: NXTG offers investors a broad play on the 5G boom, with wide and equal-weighted exposure across a ton of 5G-related names. But this broad exposure comes with an extra cost. So if you don’t mind paying up, NXTG could be your best broad bet on the 5G space.
Global X Internet of Things Thematic ETF (SNSR)
Expense Ratio: 0.68%
One of the industries which is going to benefit most as a result of the 5G revolution is the world of internet of things (IOT), mostly because 5G will significantly advance edge computing which will enable the creation and deployment of smart devices of all sorts.
The best way to play this 5G-driven IOT boom is by buying the Global X Internet of Things Thematic ETF.
The ETF’s biggest holding at 6.1% portfolio allocation is STMicroelectronics (NYSE:STM). Skyworks (NASDAQ:SWKS) and Garmin (NASDAQ:GRMN) aren’t too far behind, at 6.01% and 5.99% allocation, respectively.
The expense ratio on this ETF is 0.68%. Total holdings are around 50. But the top 5 holdings account for more than 30% of the fund’s portfolio.
Big picture: If you’re looking exclusively to invest in the overlap of 5G and IOT, consider buying the SNSR ETF today.
Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR)
Expense Ratio: 0.6%
Of course, the 5G revolution will be built on infrastructure (data centers) and real estate (cell towers). Naturally, then, one of the best ways to play the 5G boom is by buying data center stocks and cell tower stocks.
That’s exactly what the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF is for — it’s a play on data center and cell tower stocks which should boom thanks to the 5G revolution.
About 50% of the ETF’s portfolio is allocated to data center stocks, like Equinix (NASDAQ:EQIX) and GDS (NASDAQ:GDS). Around 43% is allocated to cell tower stocks, like American Tower Corporation (NYSE:AMT) and Crown Castle International (NYSE:CCI).
The expense ratio sits around 0.6%. Total holdings number just 18.
Big picture: The SRVR ETF is the best way for investors to gain broad-yet-concentrated exposure to 5G-related cell tower and data center stocks.
SPDR S&P Telecom ETF (XTL)
Expense Ratio: 0.35%
Last, but not least, on this list of 5G ETFs is the broadest ETF of them all: the SPDR S&P Telecom ETF.
Of course, as the 5G revolution unfolds, it will provide a rising tide which will lift most — if not all — boats in the telecom world. As telecom stocks rise, the SPDR S&P Telecom ETF will rise, too.
The expense ratio here sits at a very reasonable 0.35%.
Big picture: The XTL ETF offers investors the broadest 5G exposure they can find in the market, at a relatively low cost. It’s a good low-risk play if you aren’t sure what stocks are going to win because of 5G.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities.