Technology, including mobile networks, is constantly developing at a rapid pace. The first 4G services came about in the early 2010s, ushering in the era of smartphones and apps, and helping to connect us to one another even from a distance. The technology has continued to evolve, with 5G networks beginning to roll out around the world.

As with any innovation, investing in this space offers the potential for high growth. Three ETFs in particular focus on the 5G network, offering investors the opportunity to capitalize on this emerging technology.


Two Passive Plays

The Defiance Next Gen Connectivity ETF (FIVG) was the first 5G-specific ETF to hit the market, launching in March 2019. The fund tracks a tier-weighted index of global equities related to 5G networks. Though it does have a global mandate, about 89% of the portfolio is held within U.S.-listed companies.


FIVG Country Exp

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The First Trust Indxx NextG ETF (NXTG) is another passive take on the 5G space. Though the fund’s inception date is in February 2011, the fund’s investment objective prior to May 29, 2019 was slightly different. Prior to that date, the fund was known as the First Trust Nasdaq Smartphone Index Fund (FONE). (Read: Why Do ETFs Change Indexes?)

Similar to FIVG, NXTG tracks a tier-weighted index of global equities that are committing material resources to 5G and next-generation digital cellular technologies. This fund is substantially more diversified at the country level, with only 40% of the portfolio in U.S.-listed companies.


NXTG Country Exp

Chart courtesy of FactSet

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More Diversification At A Cost

Aside from regional allocations, using our ETF Comparison Tool shows that NXTG is overall a more diversified fund than FIVG. The top 10 holdings in FIVG make up over a third of the portfolio, while NXTG’s top 10 make up about 14%. Within the top holdings of the fund, only two names overlap.

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Top 10

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This increased diversification comes at a higher price. NXTG’s expense ratio is more than double that of FIVG, and the average spread is five times greater, 0.30% versus 0.06%.



Chart courtesy of FactSet

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In spite of the differing exposures and construction of the two funds, performance has mainly been in line since NXTG’s mandate change. FIVG has risen by 72% in that time frame, while NXTG has fared just slightly better, up 73%.


Chart courtesy of


Active Available, Too

In March 2020, the Esoterica NextG Economy ETF (WUGI) launched, making it the first actively managed ETF focused on 5G technology. The strategy has flexibility to invest in companies regardless of market cap or region. WUGI is only slightly more expensive than the passive NXTG. 


Cost 2

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WUGI has 36 holdings versus about 90 for its passive counterparts. There are similarities within the top holdings. WUGI shares two top 10 holdings with FIVG, and four with NXTG. The weightings of these top holdings are higher in the active WUGI, with over half of the portfolio being held within the top 10 names.



WUGI Top 10

Chart courtesy of FactSet

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The most significant industry weighting within WUGI is semiconductors, making up about 38% of the portfolio. Both FIVG and NXTG are highly allocated to this space as well.

According to Bruce Liu, chief executive officer at Esoterica Capital, semiconductor manufacturers will have significant pricing power relative to other areas of the 5G ecosystem. Advancements in semiconductor technology play a critical role in the adoption of 5G networks.

WUGI has substantially outperformed its passive counterparts since its launch in March 2020. The top holdings in this ETF, NVIDIA and Sea Limited, have been major contributors to its strong performance. NVIDIA is up 235% during this time frame, while Sea Limited is up 620%.


Chart courtesy of


This strong performance from top holdings has helped WUGI to outperform FIVG by 53% and NXTG by 60% since its launch.


(Use our stock finder tool to find an ETF’s allocation to a certain stock.)


With 5G technology still being early in the cycle, it’s possible that active management will allow for the ability to identify the winners and losers as the technology matures and becomes more widely adopted. Just as 4G technology evolved, bringing some companies to the forefront while others stumbled, the competitive landscape will shift as time goes on.

As always, it’s important to remember that past performance is no guarantee of future returns. While the active, high-conviction strategy has dominated its passive counterparts over the past year, time will tell whether that trend will continue going forward.

Contact Jessica Ferringer at or follow her on Twitter

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