In these crazy, Covid-ridden times, it would seem that 5G’s popularity only comes from its association with conspiracy theories. However, its transformational power is equivalent to that of AI, autonomous vehicles, and outer space traveling, as it will change how we live or the jobs our children will have.
More so, 5G will pose an unparalleled investment opportunity in assets such as fiber optic networks, data storage centers, computers capable of developing complex algorithms, and artificial intelligence.
In this outlook, what are the top 5G funds to consider?
Despite 5G’s current unattractiveness –and blameless controversial associations– the technology has an incredible transformation potential. This fifth generation of wireless communication is expected to be more than 100 times faster than current 4G.
Isaac Sudit, equity investment analyst at Capital Group, asserts: “5G technology is the essential ingredient that enables many of tomorrow’s leading technologies.” Its first benefits will arrive from technological innovations that today are still in the draft.
When 4G was rolled out 10 years ago, it offered more speed and connectivity, but it also served as the blueprint for the massive current ecosystem of smartphone applications like video and music streaming, social networks, and gaming.
A Race To Domination
If it were not for 5G’s enormous potential, the U.S. and China would not be locking horns to see which will dominate the technology in coming years. At present and with both at the top of the list, the former sports 279 cities featuring the technology versus the latter’s 341, according to VIAVI’s “The State of 5G Deployments” study from Q1.
RCR Wireless reports that telecom carriers in China are projected to build more than 1 million new 5G base stations this year, as its cost is bound to decrease.
On the other hand, while North America’s 5G subscription forecast remained unchanged, Ericsson –Telefonaktiebolaget LM Ericsson Class B (STO:ERIC-B)– predicts that by 2026, the region “will have the highest share of 5G subscriptions, accounting for 80% of all mobile subscriptions.”
The Neuberger Berman 5G Connectivity Fund is the top option, as it is the only one dedicated exclusively to this technological disruption. It has reached $2.5 billion in assets and profitability of more than 8% so far in 2021.
The next option is DNB Fund Technology, which focuses much of its portfolio on 5G growth, but not all –which can also benefit from the potential expansion of improved connectivity. It is a stable fund with solid net returns and great prospects in big data, the internet of things, and automation.
Another alternative is Fidelity Future Connectivity. It aims to provide investors with long-term capital growth primarily by investing in equities of companies around the world, including those in emerging markets.
According to City Wire Selector, it has $287 million in assets and was launched to capitalize on opportunities within technology and networking, as well as advances in communication.
The fund’s returns rated at 41.8% over the year to the end of June, “which compares to a return of 36.5% by the average fund in the Equity – Global Blend sector over the same timeframe.”
The ten largest stocks in the fund’s portfolio could account for 50% or more of the product’s net asset value.
At present, it bets on companies such as Sony Group Corp (TYO:6758), Samsung Electronics Co Ltd (KRX: 005930), Apple Inc (NASDAQ: AAPL), Marvell Technology Inc (NASDAQ: MRVL), and Okta Inc (NASDAQ: OKTA). So far in 2021, the portfolio accumulates a yield of more than 12% after ending with a 34% increase in 2020.
Disclosure: No positions in any securities mentioned.