The First Dedicated 5G Fund Is One Of The Most Successful New ETFs In 2019

Of the hundreds of new exchange traded funds that have come to market this year, dozens fit the bill as thematic funds. As is the case with any genre of new ETFs, some of this year's rookie thematic funds are proving successful while others aren't.

The Defiance 5G Next Gen Connectivity ETF FIVG resides in the camp of this year's successful thematic ETFs. In fact, the first dedicated 5G fund is one of the most successful new ETFs of any stripe in 2019.

New York-based Defiance ETFs, FIVG's issuer, said Monday the fund topped $135 million in assets under management in just nine months on the market, an impressive feat for a highly focused fund from an upstart issuer.

Why It's Important

FIVG's solid start is relevant because 5G rollout has been limited this year, but is expected to surge in 2020, indicating some investors have been preparing for that trend with the new ETF.

“The First 5G ETF has had significant organic growth and is one of the lowest cost thematic ETFs at only 0.30%,” said Defiance ETFs CEO Matthew Bielski. “We have seen continued investor interest given the recent acceleration of the 5G buildout which we believe has the potential to accelerate in 2020.”

Not only if FIVG's annual fee of 0.30%, or $30 on a $10,000 investment, favorable relative to other thematic funds, it makes the Defiance ETF 40 basis points cheaper than the competing 5G ETF.

FIVG targets the rules-based BlueStar 5G Communications Index, which includes companies from the following arenas:

“[C]ore carrier grade networking equipment including cellular antennas and routers, mobile network operators, satellite-based communications, enhanced mobile broadband chips, new radio technology, wireless network test and optimization equipment, cloud computing equipment, software defined networking or network functions virtualization, fiber optic cables, or cell tower and/or data center real estate investment trusts,” according to Defiance.

What's Next

Importantly, 5G is an international theme, one that touches major markets in the U.S. and China as well as Canada, Europe and other advanced economies in Asia. Moreover, 5G intersects with multiple technologies of tomorrow, potentially making FIVG a compelling idea today.

“Widespread 5G connectivity won’t just cut download times and enhance online leisure such as eSports,” according to Defiance. “It has the potential to make information universally accessible, foster a digitalized sharing economy, transform diverse industries and enhance people’s quality of life. From smart cars to VR/AR functions; from manufacturing to the automotive industry to medicine and healthcare, the impact of 5G could be felt across many spheres.”

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