U.S. Markets closed

How 5G Can Benefit The Internet of Things ETF

This article was originally published on ETFTrends.com.

The Global X Internet of Things Thematic ETF (SNSR) , the first exchange traded fund dedicated to IoT investing, is one of the ETFs that is poised to benefit from the move to 5G telecommunications systems.

SNSR is considered a thematic ETF. Thematic strategies tend to be alpha-seeking, have a long time horizon and are growth oriented. The thematic investments also transcend classic sector, industry and geographic classifications as many overlap.

SNSR, which is two years old, targets the Indxx Global Internet of Things Thematic Index. IoT “includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet,” according to Global X.

“5G, or fifth generation cellular communications technology, has become a hot topic across industries for its potential impact on emerging technologies, and specifically, the Internet of Things (IoT), which describes the development, manufacture and use of connected devices,” said Global X in a recent note. “These devices range from small heart rate-monitors to autonomous vehicles, smart home appliances, intelligent factories, and much more. Together, such tools share the use of sensors, chips and processors to collect, transfer and analyze data, all the while interacting with other devices on a network.”

What's Next For 5G?

SNSR, which debuted in September 2016, is a global ETF with exposure to 10 countries with the U.S. accounting for about two-thirds of the geographic weight. The ETF holds 46 stocks, most of which hail from the technology sector.

The fund devotes over 31% of its weight to semiconductor stocks, but the IoT theme intersects with other sectors beyond technology, including communication services and healthcare, something that is reflected in SNSR.

Related: Look to Semiconductor ETFs Once U.S., China Reach a Deal

Importantly, there are obvious intersections between the 5G and IoT themes.

“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,” according to Global X. “Similarly, 5G networks are expected to offer flexibility to handle a range of connected devices, including those that don’t necessarily need real-time communication but still require periodic, low-power data transfer for years at a time.”

SNSR is up almost 8% this year.

For more information on the tech sector, visit our technology category.