A lot of people are excited about 5G adoption worldwide – the next generation of wireless technology. If you’re looking to invest in future technologies, 5G is a great bet.
The global private 5G market is expected to grow at ridiculous rates going into the future.
Investing through a 5G ETF is a great idea because it provides a low-cost way to diversify your 5G exposure.
We’ll cover the best 5G ETFs in Canada below, and talk about their features.
Best 5G ETFs in Canada
Note that because there aren’t a lot of 5G ETFs in Canada, I’ve included American ones as well.
1. First Trust Indxx NextG ETF
- Ticker: NXTG.TO
- Inception Date: October 29, 2014
- Assets under Management: $1.78 million
- Management Expense Ratio: 0.78%
- Listed on: Toronto Stock Exchange
- Stock Price: $9.99
- YTD Return: -0.36%
A Canadian ETF that trades on the Toronto Stock Exchange, NXTG from First Trust Indxx focuses on 5G companies in the US.
NXTG invests across roughly 100 stock holdings. The ETF is extremely small which puts it at risk of closing down in the future if it is unable to attract additional capital. NXTG’s MER is also high relative to its peers.
The ETF does not pay a yield and has a long performance track record. The ETF does not hedge out any currency fluctuations between the Canadian dollar and other currencies.
While it is the only Canadian option for investing directly in 5G companies, better US-listed alternatives exist.
2. Defiance 5G Next Gen Connectivity ETF
- Ticker: FIVG
- Inception Date: March 4, 2019
- Assets under Management: $953.46 million
- Management Expense Ratio: 0.30%
- Listed on: New York Stock Exchange
- Distribution Yield: 0.94%
- Stock Price: $37.07
- YTD Return: 1.39%
FIVG is a US-listed ETF that focuses on US-listed global companies involved in the 5G space. The ETF will need to be purchased on the US side of your accounts, in US dollars.
FIVG currently has around 85 stock holdings. The ETF is very large and is reasonably priced in terms of its MER relative to peers.
The ETF pays a decent distribution yield, paid out quarterly. FIVG does, however, have a very short performance track record available. Since the ETF is US-listed, currency fluctuations between the US dollar and Canadian dollar will impact your overall return.
Aside from its short track record, FIVG has great overall features as an ETF. It’s a good US-listed choice for a pure-play approach to investing in 5G.
3. Esoterica NextG Economy ETF
- Ticker: WUGI
- Inception Date: March 31, 2020
- Assets under Management: $23.13 million
- Management Expense Ratio: 0.75%
- Listed on: CBOE BZX Exchange
- Stock Price: $57.97
- YTD Return: 6%
WUGI is another US-listed ETF that focuses on global companies involved in the 5G space. The ETF will need to be purchased in US dollars.
WUGI typically has between 25-45 stock holdings. The ETF is fairly small and is expensive when it comes to its MER.
The ETF does not pay a yield and has a very short performance track record available. Currency fluctuations between the US and Canadian dollar will impact your total returns in CAD.
Keep in mind that WUGI is listed on the CBOE BZX Exchange, unlike other US ETFs here listed on the NYSE.
It is difficult to recommend WUGI over FIVG since WUGI is significantly smaller, more expensive, and newer.
4. Vanguard Communication Services Index Fund ETF
- Ticker: VOX
- Inception Date: September 23, 2004
- Assets under Management: $2.78 billion
- Management Expense Ratio: 0.10%
- Listed on: New York Stock Exchange
- Distribution Yield: 1.05%
- Stock Price: $126.4
- YTD Return: 3.96%
VOX is a US-listed ETF offered by Vanguard. Unlike the previous ETFs, it invests in the communication services sector in the US. A lot of the companies in the sector are involved in some way with 5G.
VOX will need to be purchased in US dollars and has just over 100 stock holdings. The ETF is massive and has an extremely low MER compared to the others on our list.
The ETF offers a fairly low yield, paid quarterly. It has a very long performance track record available. As before, currency fluctuations between the US and Canadian dollar will impact your total returns in CAD.
Because of VOX’s great overall features, we highly recommend it as a way to invest in the communication services sector, as well as 5G.
5. SPDR S&P Telecom ETF
- Ticker: XTL
- Inception Date: January 26, 2011
- Assets under Management: $61.01 million
- Management Expense Ratio: 0.35%
- Listed on: New York Stock Exchange
- Distribution Yield: 0.94%
- Stock Price: $75.8081
- YTD Return: -4.13%
XTL is also a US-listed ETF, this time offered by State Street. It focuses on the telecommunications segment of the S&P Total Market Index. It does not focus exclusively on 5G and its underlying stocks are all US companies.
XTL trades in USD and has roughly 50 stock holdings. The ETF is small and has a fairly low MER compared to the others on our list.
The ETF pays a decent yield quarterly and has a long performance track record available. Currency fluctuations between the US and Canadian dollar will impact your total returns in CAD.
XTL’s features are fairly good and it’s a great way to get US telecommunication exposure.
- Ticker: IYZ
- Inception Date: May 22, 2000
- Assets under Management: $377.87 million
- Management Expense Ratio: 0.39%
- Listed on: CBOE BZX Exchange
- Distribution Yield: 2.31%
- Stock Price: $22.07
- YTD Return: 3.21%
IYZ is a US-listed ETF offered by iShares. It is a direct competitor to XTL and has a similar mandate to focus on US telecom stocks. Its underlying stocks are all US companies.
IYZ trades in US dollars and is listed on the CBOE BZX Exchange. It has just over 20 stock holdings, making it an extremely concentrated ETF.
The ETF is fairly large and has an average MER compared to the others on our list. Since IYZ is so concentrated, you are not getting as much value in terms of diversification for the fees that you are paying.
IYZ pays a good quarterly yield and has a very long performance track record available. Currency fluctuations between the US and Canadian dollar will impact your total returns in CAD.
Because of IYZ’s concentration across just several stocks, other ETFs will do a better job diversifying your telecommunication and 5G investment exposure.
- Ticker: IXP
- Inception Date: November 12, 2001
- Assets under Management: $288.19 million
- Management Expense Ratio: 0.40%
- Listed on: New York Stock Exchange
- Distribution Yield: 1.17%
- Stock Price: $80.59
- YTD Return: 3.88%
IXP is the last ETF on our list, also offered by iShares. It also focuses on the communication services sector, but with a global approach. This will help to diversify your investment outside of just the US.
IXP trades on the NYSE in US dollars and has over 70 global stock holdings.
The ETF is decently-sized and comes with an average MER. With a similar MER to IYZ, IXP invests your money globally and across more stock names.
IXP also offers a good semi-annual yield and has a very long performance track record available. IXP does not hedge its global exposure back to the US dollar.
iShares’ IXP is a great ETF for partial exposure to 5G companies, packaged in a global and well-diversified ETF.
Which 5G ETF is the Best?
If you are looking for a 5G pure-play ETF, FIVG is likely the best option due to its great features. As the only Canadian option, NXTG is hard to recommend because of its tiny size and high MER.
If you are looking to get partial 5G exposure through a telecommunications or communications services ETF, VOX is your best option. It is extremely inexpensive and is one of the biggest ETFs in this space, although it only invests in the US.
What Companies are Involved in 5G in Canada?
Publicly-traded Canadian companies that are involved with 5G include Rogers Communications Inc., Telus Corp, and BCE Inc. These names in particular have been expanding their 5G networks over the past few years.
How to Buy the Best 5G ETFs in Canada
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Conclusion
If you are looking to get ahead of the curve and invest in 5G, it will likely come from a 5G-focused or telecommunications ETF. FIVG and VOX are both fantastic ETFs to consider, depending on the approach that you’re looking to take.
Remember to properly diversify when investing for long-term growth. This will mean diversifying outside not only 5G, but also outside the telecommunications sector.
