Defiance ETFs has launched the world’s first ETF directly linked to the theme of 5G technology – the Defiance Next Gen Connectivity ETF (FIVG US).
5G adoption should provide faster speeds, more functionality, and lower latency, helping to transform work practices and daily life.
5G (from “5th Generation”) refers to the latest generation of cellular mobile communications and the innovation and infrastructure that supports the technology.
Its adoption should provide faster speeds, more functionality, and lower latency, helping to transform work practices and daily life.
Widespread 5G connectivity has the potential to make information universally accessible, foster a digitalized sharing economy, transform diverse industries, and enhance people’s quality of life.
The impact of 5G is expected to be felt across many spheres such as smart cars, VR/AR functions, manufacturing, healthcare, and the internet of things.
Matthew Bielski, Chief Executive Officer of Defiance ETFs, commented, “5G is disruption. It is the catalyst for the next revolution of technology. In our view, 5G will likely be the engine behind smart cities, augmented reality, remote virtual robotics surgery, autonomous vehicles, and quantum computing.”
The fund gains its thematic exposure by tracking the BlueStar 5G Communications Index which consists of US-listed equities as well as American Depositary Receipts of companies listed outside the US. Any company with a market capitalization greater than $150m is eligible for inclusion.
Index provider BlueStar Global Investors determines whether a firm’s products and services are predominantly tied to the development of 5G technology by examining regulatory filings, analyst reports, and industry-specific trade publications.
Companies deemed to belong to the 5G theme are assigned to one of four segments of the 5G communications industry. Constituents within each segment are weighted by market capitalization subject to a floor of 0.50% and caps as described below. The index is reconstituted and rebalanced semi-annually in June and December
The first segment consists of ‘core’ 5G companies whose products or services are predominantly tied to cellular network equipment or satellites operating in the C-band wireless spectrum. This segment is assigned a starting index weight of 50%, and individual companies within the segment are initially capped at 5%.
The second segment consists of cellphone tower companies and data center real estate investment trusts (REITs) that predominantly provide services as a mobile network operator (MNO) or whose products or services are tied to the infrastructure or cloud-based services supporting such REITs and MNOs. REITs and MNOs must have a minimum market capitalization of $1 billion to be included in the index. This segment is assigned a starting index weight of 25%, and individual companies within the segment are initially capped at 3%.
The third segment consists of hardware and software providers focused on quality of service assurance for MNOs and media companies or network testing and bandwidth optimization equipment. This segment is assigned a starting index weight of 15%, and individual companies within the segment are initially capped at 5%.
The fourth segment consists of companies providing enhanced mobile broadband modems, new radio technology for connected devices, or optical fiber cables. This segment is assigned a starting index weight of 10%, and individual companies within the segment are initially capped at 3%.
The index currently has 57 constituents. Over three-quarters (78.4%) of the total index exposure is currently allocated to US equities, while the next largest country exposures are Finland (5.0%), and Sweden (5.0%).
The ETF has been listed on NYSE Arca and comes with an expense ratio of 0.30%.