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A New 5G ETF Could Debut Today

ETF Professor

Another exchange traded fund focusing on the 5G communications phenomenon is coming and it could debut as soon as today.

What Happened

As was previously reported, First Trust is converting the First Trust Nasdaq Smartphone Index Fund (NASDAQ: FONE) to a dedicated 5G ETF. The new ETF will be known as the First Trust Indxx NextG ETF and will trade on the NASDAQ, FONE's current exchange, under the ticker “NXTG.”

Illinois-based First Trust announced the conversion of FONE to the First Trust Indxx NextG ETF in March, saying at the time the new 5G ETF could debut “on or around May 29.” FONE debuted over eight years ago, but has just $13.9 million in assets under management.

Why It's Important

NXTG will track the Indxx 5G & NextG Thematic Index.

That benchmark ““is designed to track the performance of companies that have devoted, or have committed to devote, material resources to the research, development and application of fifth generation (“5G”) and next generation digital cellular technologies as they emerge. By utilizing higher frequency radio waves, 5G networks enable significantly increased data rates, reduced latency and high-density connections that were previously unavailable in preceding technological generations,” according to regulatory filing.

Companies in NXTG's underlying index are those firms “that have devoted material resources or made material commitments to the use of 5G technology,” said First Trust. “The index is designed to track the performance of companies that are at the core of the research and development of the new 5G cellular technology.”

What's Next

First Trust's 5G will face entrenched competition in the form of the Defiance 5G Next Gen Connectivity ETF (NYSE: FIVG), which debuted in March and now has $77.55 million in assets under management.

NXTG is expected to keep FONE's expense ratio of 0.70 percent per year, or $70 on a $10,000 investment, well above the 0.30 percent charged by FIVG.

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