Despite its early missteps and attendant controversies, 5G has transformational power equivalent to AI, autonomous vehicles, and outer space travel that will change how we live or the jobs our children will have, reports financial news and research platform, Benzinga.
At the same time, the report states that 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.”
5G’s appeal is its transformation potential. This fifth generation of wireless communication is expected to be more than 100 times faster than current 4G. 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.
According to Isaac Sudit, equity investment analyst at Capital Group: “5G technology is the essential ingredient that enables many of tomorrow’s leading technologies.” Sudit says its first benefits will arrive from technological innovations that today are still in the draft.
A Race to Domination
With 5G’s potential, the U.S. and China are competing to establish which country will dominate the technology in coming years. At present, the U.S. has 279 cities that are 5G-enabled versus China’s 341 metropolitan areas, according to VIAVI’s “The State of 5G Deployments” study from Q1 2021.
China continues its 5G large-scale growth at a very fast pace. As of the end of Q2 2021, China Tower’s total 5G installed base is an estimated 1,022,000 sites. (See, China Tower Maintains Its Fast Infrastructure Deployment Pace)
Even so, North America’s 5G subscription forecast remains unchanged. Ericsson (NASDAQ: ERIC) predicts that by 2026, the region “will have the highest share of 5G subscriptions, accounting for 80 percent of all mobile subscriptions.”
Top 5G Investment Funds
Several investment funds are focused on 5G, and apparently are performing well.
The Neuberger Berman 5G Connectivity Fund is investing “primarily in a portfolio of global equity holdings, focusing on companies that are involved or derive benefit from Next Generation Connectivity.” The portfolio’s top three picks are Keysight Technologies (NYSE: KEYS), Marvell Technology (NASDAQ: MRVL), and Advanced Micro Devices (NASDAQ: AMD). With a share class size of over $440 million, the Neuberger Berman 5G Connectivity fund returned 44.8 percent over a one-year period ending on June 30, 2021, according to Citywire Selector.
The DNB Fund Technology emphasizes “investments in the equities of companies operating in or associated with the technology, media and telecom sectors,” all of which can also benefit from the potential expansion of improved connectivity. It is a stable fund with a 40.3 percent year-over-year return through the end of July. Its prospects are in big data, the internet of things, and automation with holdings in Microsoft (NASDAQ: MSFT), Deutsche Telekom (DTE.DE), Facebook (NASDAQ: FB) and Vodafone Group (NASDAQ: VOD).
Another alternative is the Fidelity Future Connectivity Fund with connectivity-themed investments in “companies involved in the roll out of cellular network technology, infrastructure projects related to internet connectivity (both wired and wireless), content production, streaming and consumption, and mobile commerce.” With $287 million in assets, its top bets include Samsung Electronics (KS: 005930), Marvell Technology and Taiwan Semiconductor Manufacturing Co (NYSE: TSM). Through the end of July, FFC’s total return is up 31.5 percent from a year ago.
By John Celentano, Inside Towers Business Editor