How To Get In On 5G With This ETF

The race to establish 5G communications systems has started in earnest, a theme that could potentially benefit an array of investments.

Predictably, communication services and technology stocks are among the assets that could see a 5G bump, but investors looking to really hone in on the 5G opportunity may want to think tactically with more focused exchange traded funds.

What Happened

The Global X Internet of Things ETF SNSR, which tracks the Indxx Global Internet of Things Thematic Index, is one ETF to consider for investors seeking exposure to the 5G theme. Internet of Things (IoT) and 5G are a relevant combination because, over the next several years, billions of devices around the world are expected to be connected via IoT standards and 5G will power those connections.

“The new standards are made possible by innovation across several technologies, including semiconductors, communications equipment like routers and antennas, and the sensors embedded in devices sitting on the edge of a network,” said Global X in a recent research piece.

Why It's Important

SNSR, which will turn three years old in September, reflects the expansive nature of the IoT space, meaning the ETF is home to about 10 industry groups. Those industries include semiconductors, electrical components, health care equipment, communications equipment and consumer electronics among others.

Ten countries are represented in SNSR with the U.S. accounting for about two-thirds of the fund's geographic weight. That's relevant because the U.S. has a ways to go to catch up with other countries when it comes to 5G spending.

“Over the past few years several telecommunications companies, particularly those in East Asia, North America and Europe, have begun to develop and even pilot 5G networks in specific markets, usually cities,” said Global X. “China, for instance, has already outspent the US by $24 billion since 2015 on 5G technology, deploying about 350,000 new cell sites relative to just 30,000 in the US.”

The first 5G smartphones will debut this year and network consolidation is expected to be reached in 2020.

What's Next

There are myriad business applications that underscore the relevance of IoT in the 5G space. Those include artificial intelligence and virtual reality applications, smart infrastructure, health care and more.

“5G is expected to help businesses more effectively manage the ever-increasing quantities of information produced by the Internet of Things, as well as improve the near-instantaneous communication necessary for mission critical services like robotics-assisted surgery or autonomous driving,” said Global X.

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