10 Best 5G ETFs to Buy in Q3 2024

By:

James Knight

James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.

Updated: Jul 8, 2024

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Choosing the right 5G stocks as the 5G theme develops isn’t easy, but you might not need to choose individual stocks at all. If you want a ready-made 5G portfolio that doesn’t require intensive monitoring, investing in one or more 5G exchange-traded funds (ETFs) might be your best option for gaining portfolio exposure to the next generation of wireless networks.

In this guide, we are to talk about 5G ETFs and the ones to buy in 2024.

What are the top 5G ETFs to buy?

Here are the top 10 ETFs that focus on 5G stocks:

1. First Trust Indxx NextG ETF

One of the best ways to expand portfolio exposure to next-generation mobility is through First Trust’s 5G ETF. The fund invests in stocks of companies with market capitalizations of at least $500 million that are involved in the development and deployment of 5G technology.

With less than $1 billion in assets-under-management (AUM), the First Trust Indxx NextG ETF is not the largest ETF on this list. However, it has been in existence since 2011 and has doubled in value since 2016. It has an annual cost ratio of 0.70 percent, which means that for every $1,000 invested, $7 in fund management fees are charged per year.

2. Vanguard Communication Services ETF

Vanguard Communication Services ETF is the biggest telecom ETF currently investing in 5G companies. Verizon Communications (NYSE: VZ), Comcast Corporation (NASDAQ: CMCSA), and AT&T are among the biggest 5G assets. Other significant holdings include Facebook (NASDAQ: FB) and Google’s parent company Alphabet (NASDAQ: GOOG). This ETF will provide you with diverse exposure to the 5G market and beyond, thanks to widespread investments in some of the largest US tech companies.

3. iShares U.S. Telecommunications ETF

The iShares U.S. Telecommunications ETF is a good option if you’re looking for investment returns. Its 44 stocks are primarily telecommunications companies. AT&T and Verizon account for 40% of the fund’s overall holdings by size, along with a portfolio of stocks from large technology firms (like Cisco) that offer mobile network infrastructure and software management resources.

4. Defiance Next Gen Connectivity ETF

The Connectivity ETF invests in companies that develop technologies allowing 5G providers to deliver services. Hardware manufacturers account for approximately 75% of the fund’s AUM, distinguishing it from rivals such as the Vanguard Communication Services ETF that focuses mostly on software manufacturers. Many of the assets overlap with those of the First Trust Indxx NextG ETF.

5. Global X Internet of Things ETF

The phrase “internet of things” (IoT) refers to a network of devices that are linked together through the internet, such as an Amazon’s Alexa that you can control through your phone. Consider this ETF if you want to invest in companies that make goods that incorporate 5G technology. The majority of the shares are in companies that manufacture GPS devices and wireless communication solutions.

Where to buy the best 5G ETFs

Whether you’re investing in 5G ETFs for the long term, or looking to trade in and out more regularly, you’ll find that most brokers will allow you to trade 5G ETFs. Be sure to research the best broker for you.

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Invest in 5G ETFs in 3 Steps

1. Open a Trading Account
The first step is to register with an online broker. Pay attention to commissions and keep an eye out for hidden fees such as interest on margins (borrowed money) or withdrawal service fees. Take note of trading restrictions and minimum account balances as well.

2.Choose 5G ETFs
Your broker’s online portal will show a list of available ETFs (including 5G ETFs), and some platforms will allow you to narrow the list to find ETFs from a specific provider or with low fees.

3.Execute Your Trade
When you’ve found the ETF you want to buy, you can purchase it from your broker in about the same way you do a stock.

What are 5G ETFs?

5G, which stands for the “fifth generation” of mobile technology, is the next big standard for broadband cellular networks. Experts predict that 5G networks will eventually provide consumers with data speeds of up to 10 gigabytes per second.

An exchange-traded fund (ETF) is a basket of stocks that trades on the stock market like an ordinary share of stock. Unlike mutual funds, ETFs can be purchased at any time during the trading day. The stocks included in an ETF are generally driven by a theme. For instance, a 5G ETF will hold the stocks of companies that offer 5G services.

Now you know what 5G ETF is, let’s look at how to invest in 5G ETFs.

Are 5G ETFs a good investment?

As 5G expands, including a 5G ETF in your portfolio offers a rare combination of diversification and exposure to developing technology. If you plan to invest in ETFs, you should first understand the cost ratio associated with each fund. For the lowest expense ratio, consider the Vanguard Communication Services ETF, which has a low expense ratio of 0.10 percent.

Investing in ETFs can be a simple and convenient way to benefit from the advancement of 5G technology. ETFs have built-in diversification and are less volatile in price than individual stocks. But keep in mind that 5G is a growing industry. As a result, expect some uncertainty as the 5G infrastructure is introduced and customer and business adoption grows.

Methodology: How we choose the best 5G ETFs

At Invezz, we are dedicated to helping investors make informed decisions by providing authoritative, accessible, and engaging advice and recommendations. Our curated section of the best Exchange-Traded Funds (ETFs) is carefully selected by our team of experienced market analysts and reviewed by a sub-editor. This methodology outlines the rigorous process we follow to ensure our ETF recommendations are up-to-date, reliable, and insightful.

• Analyst research & recommendations: Our seasoned market analysts use their in-depth sector knowledge to identify ETFs with strong potential, ensuring they meet high standards of performance, liquidity, and market potential.
• ETF evaluation: We evaluate ETFs based on their underlying assets, historical performance, expense ratios, and tracking accuracy, alongside macroeconomic factors and sector trends.
• Fund performance reports: We assess ETFs through the latest performance reports, analyzing key metrics like returns, volatility, expense ratios, and assets under management (AUM).
• Sector analysis and external recommendations: Our detailed sector analysis, combined with recommendations from reputable sources like Barron’s and Zacks, provides an additional layer of validation for our selections.
• Quarterly review & refresh: We update our curated ETF list quarterly, re-evaluating each ETF based on the latest reports, industry developments, and market conditions to ensure our recommendations reflect the most current information available.

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