Evolve Funds adds 5G companies to innovative technology ETF

Jul 23rd, 2019 | By | Category: Equities

Evolve Funds has announced that the Evolve Innovation Index Fund (EDGE CN) has started investing in companies linked to the theme of 5G technology, following an update to its underlying index.

Raj Lala, President and CEO of Evolve ETFs

Raj Lala, President and CEO of Evolve Funds.

Launched in May 2018, the Toronto Stock Exchange-listed ETF tracks the Solactive Global Innovation Index which covers developed market companies involved in innovative or disruptive trends across a broad range of industries.

The index originally covered firms operating in the following industries: blockchain, robotics and automation, future cars, cybersecurity, big data and cloud computing, genomics, virtual & augmented reality, and social media.

Effective 22 July, the index now also includes 5G companies as an additional industry group.

Each industry group is equally weighted in the index, and constituents within each industry group are also equally weighted. The exception to this rule is the cybersecurity group where companies are weighted according to their market capitalization with a cap of 7.5% per constituent.

The index is reviewed semi-annually and rebalanced on a quarterly basis.

Outlook for 5G sector

5G (or fifth 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. Its impact is expected to be felt across many spheres such as smart cars, VR/AR functions, manufacturing, healthcare, and the internet of things.

“5G technology will deliver much faster connection speeds with less latency and greater reliability,” said Raj Lala, President and CEO, Evolve Funds. “This will help fuel a huge rise in Internet of Things technology allowing for a smarter and more connected world. This will be critical in many aspects of our future lives including self-driving cars and robotics.”

“The inclusion of 5G as an additional index category further strengthens the disruptive nature of the Solactive Global Innovation Index,” added Timo Pfeiffer, Head of Research at Solactive. “5G as a technology allows for faster, more stable and versatile network compared to the existing 4G technology and will hence shape the future in that segment.”

Pure-play 5G

There are currently two ETFs that target the 5G theme, both of which are listed in the US.

Defiance ETFs launched the world’s first ETF directly linked to the theme of 5G technology – the Defiance Next Gen Connectivity ETF (FIVG US) – in March 2019. The fund tracks the BlueStar 5G Communications Index, houses $100 million in assets, and comes with an expense ratio of 0.30%.

The First Trust Indxx NextG ETF (NXTG US) tracks the Indxx 5G & NextG Thematic Index which provides exposure to smartphone companies within the global telecom and technology sectors while tilting towards firms that provide 5G technology. It has $160m in AUM but is relatively pricey with an expense ratio of 0.70%.

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