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A Pair of ETFs to Take Advantage of the 5G Infrastructure Buildup

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This article was originally published on ETFTrends.com.

5G technology is on the horizon, which is expected to revolutionize the transmission of data, leading to smart cities that thrive on digital applications. Before the deployment of 5G takes place, however, the buildup of its infrastructure is necessary, which is where investors can take advantage of ETFs like the Pacer Benchmark Data & Infrastructure Real Estate SCTR Strategy (SRVR) and the Pacer Benchmark Industrial Real Estate SCTR Strategy (INDS).

Investors who missed out on the serendipitous run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks in the last bull run can look to capitalize on disruptive tech options like 5G technology. 5G technology will use a higher frequency band versus the current 4G technology standard, resulting in faster transmission of data.

Being able to transmit copious amounts of data at a faster rate is certainly of benefit for wireless companies and their users, but 5G could be a major disruptor in various industries. Before this occurs, however, the infrastructure to accommodate this enhanced technology must be in place.

With a buildup necessary in cell towers and distribution warehouses, a demand for public real estate could follow.

“Think of a streetscape where you have a traffic sign, often times that pole will have several signs on it. If you had stand-alone structures for each application, there won’t be enough real-estate,” said Alex Gamota, Sr. VP and General Manager for the ICT Division of BigBelly, a provider of smart waste bins as well as other smart city platforms.

“Real-estate and public space is a scarce commodity,” Gamota added.

As such, investors can look at SRVR, which seeks to track the total return performance of the Benchmark Data & Infrastructure Real Estate SCTR Index. The index is generally composed of the U.S.-listed equity securities of companies that derive at least 85% of their earnings or revenues from real estate operations in the data and infrastructure real estate sectors.

Additionally, investors can look to INDS, which seeks to track the total return performance of the Benchmark Industrial Real Estate SCTR Index. The index measures the performance of the industrial real estate sector of the U.S. equity market, which includes warehouse and self-storage real estate sub-sectors.

Related: ETF of the Week: Pacer Trendpilot 100 ETF (PTNQ)

Exponential Growth Projected

As the demand for faster internet speeds increase, exponential growth is expected for the 5G infrastructure market. Furthermore, 5G capability allows greater scalability so it can accommodate more growth over time as needed, resulting in the need for more industrial real estate.

Per MarketResearch.biz, "investments in 5G infrastructure is expected to be double as compared to setting up of legacy networks as operators strive to meet demand for increased capacity and deploy 5G."

Major drivers of revenue include government initiatives that will help fund 5G technology infrastructure. Furthermore, MarketResearch.biz is projecting that the global 5G infrastructure market will be valued at nearly $0.8 billion in 2019, and is expected to register a compound annual growth rate (CAGR) of 48.8%.

A Pair of ETFs to Take Advantage of the 5G Infrastructure Buildup 1
A Pair of ETFs to Take Advantage of the 5G Infrastructure Buildup 1

Huawei Not Hindering Buildup

Reports surfaced that Chinese telecommunications equipment giant Huawei could potentially hinder the buildup of the 5G infrastructure. China's state media argued that banning Huawei would reduce competition and drive up the cost of implementing 5G technology, but according to experts, that claim doesn't hold weight.

Domestic telecom giants like Nokia, Ericsson and Samsung can supplant Huawei's efforts.

"Even if Huawei was permanently excluded from the U.S., its competitors like Nokia, Ericsson, Verizon and AT&T, to name a handful, have the scale to ensure that the U.S. is fully catered for. Qualities like speed are unlikely to suffer in the U.S. in this scenario," Vinod Nair, a Singapore-based senior partner at advisory and investment firm Delta Partners, told CNBC via email.

For more market trends, visit ETF Trends.

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