05 Jan 2023
Speed makes all the difference in telecommunications, and 5G is racing toward a more connected future, signaling high-potential opportunities for investors.
5G, the fifth generation of mobile technology, has traveled light-years beyond 4G to deliver exponentially higher speeds—as well as growth possibilities for investors. While investing in an emerging industry like 5G has its share of risk, investors can explore a spectrum of investments, from telecom companies like Verizon to mutual funds and ETFs that include exposure to 5G companies around the world.
Over the next five years, half of all worldwide data is expected to be generated not by people, but computerized, connected devices (1). 5G is making that possible. From 2G to 3G to 4G and now 5G, each new generation of mobile technology has one-upped communication technologies. Each has utilized higher radio frequencies and cutting-edge advancements to increase the speed and capability of cellular data, and boost the range at which cell phones can get a reliable signal. From wireless to broadband to fiber optics, widespread release of 5G technology is expected to give us the power to immediately access the information we need from anywhere in the world.
What makes 5G a game changer is its ultra-low latency rate, or how long it takes to send data from one point to another. Its latency is less than 10 milliseconds, an astonishing 5,000 percent reduction of 4G’s rate (2)—and this opens up applications for real-time interactions even when people or devices are thousands of miles away.
Because of the low latency rate, the adoption of 5G signals more than the future of mobile phones. Sectors like manufacturing have geared up automation using 5G. Upgraded streaming capabilities are supercharging cloud-based applications, from the workplace to gaming. Industries are using 5G to tap into the capabilities of the Internet of Things, connecting autonomous vehicles as well as smart cities that can access instant data on traffic and environmental conditions. Health care also gets an assist from 5G, with telemedicine reaping lifesaving benefits, like medical professionals accessing real-time data about their patients, or even completing surgical procedure remotely, without delays.
Although the 5G market value was more than $10 billion in 2021, the 5G technology market is anticipated to surge over the next seven years, reaching over $3 trillion by 2030 (3). What’s driving this growth? Demand for faster connections and high-speed data, as well as digitalization and technology advancements—especially as more and more companies and consumers tune into cloud-based services. 5G promises growth, and it’s expected to deliver, to businesses, consumers, and investors.
Exponentially faster than the previous generation of mobile technology, 5G also promises exponentially more opportunities for investors eyeing 5G stocks. Like many emerging industries, 5G technology is being pioneered by a handful of standout companies, both large incumbents and fast-growing startups.
Investors looking into 5G investments can follow earnings reports for telecommunications providers who are spending big to connect homes and mobile phones with 5G wireless. Investors looking to diversify their holdings may see opportunities in overseas 5G markets, such as South Korea and China, leading countries in 5G network coverage, or India, where nearly 10 percent of its billion wireless subscribers already use devices that are 5G capable and will not need to purchase new smartphones (4). And it’s still early—investors who get in on 5G now will have far more upside to ride up than those who wait until the technology is fully rolled out and in broad use.
5G trends to watch:
However, as with any emerging industry, there are risks to investing in 5G:
5G adoption is expected to take off, but the timeline isn’t set, and which companies will take the lead is still up for grabs. Still, 5G’s explosive potential is why this up-and-coming form of mobile internet is a key area for investors who are interested in the latest technology.
Investing in the sector via an ETF or mutual fund is a good way to counter the risks of a growth industry like 5G while still gaining exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to tap into 5G, from emerging markets to industries that are transforming with 5G capabilities:
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This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. Investors should carefully consider the investment objectives and risks as well as charges and expenses of all innovation-related securities before investing. Read the prospectus carefully before investing. ETFs and mutual funds are actively managed and there is no guarantee that the manager’s investment decisions will produce the desired results. All investments involve risks, including possible loss of principal. ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and fund expenses will reduce returns. You should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a summary prospectus and/or prospectus, which contains this and other information and read it before you invest or send money.