Cloud computing and 5G have been hot investing areas lately thanks to higher demand and stupendous stock market gains of the industry players. Now wonder, iShares Trust is on its way to launch an ETF on the dual concepts. The name of the proposed fund is iShares Cloud 5G and Tech ETF IDAT.
Inside IDAT
The iShares Cloud 5G and Tech ETF looks to track the investment results of an index composed of companies from developed and emerging markets that could benefit from providing products, services, and technologies related to cloud computing and 5G. The fund would charge 47 bps in fees (read: 5 Most-Crowded Trades & Their Winning ETFs).
How Does It Fit in a Portfolio?
Cloud computing is a process in which data or software is stored outside of a computer, but can be easily accessed anywhere, at any time via the Internet. This idea is effective as it helps firms to lower IT costs by eliminating the need for servers and related maintenance costs.
In the wake of the pandemic, cloud technology adoption is projected to witness robust growth in sectors where work-from-home initiatives are sustaining business functions. Globally, end-user spending on public cloud services is forecast to grow 23% in 2021 to a total $332.3 billion, according to Gartner (read: A Comprehensive Guide to Cloud Computing ETFs).
On the other hand, 5G, the next era of smarter, faster and more efficient wireless technology, has lately picked up pace. The initial round of rollouts has been gathering steam globally. It is operational in many major cities in the United States, as well as places in China, South Korea and the United Kingdom, among other countries.
Carriers are busy building foundations. Phone makers have also started launching 5G-enabled handsets. Investors should note that apart from the faster usage of mobile networks, 5G is going to strengthen the mechanism of the growing Internet of Things (IoT) so that a human-to-object interaction can be set up smoothly (read: 5G Gaining Immense Traction: ETFs to Bet On).
Competition
Defiance Next Gen Connectivity ETF FIVG, Pacer Benchmark Data & Infrastructure Real Estate Sector ETF (SRVR), ALPS Disruptive Technologies ETF (DTEC) and First Trust Indxx NextG ETF (NXTG) are some of the ETFs that have exposure to 5G-enabled companies.
On the other hand, First Trust Cloud Computing ETF (SKYY), Global X Cloud Computing ETF CLOU, WisdomTree Cloud Computing ETF (WCLD) and Wedbush ETFMG Global Cloud Technology ETF (IVES) are the ETFs that thrive on cloud computing.
Hence, there is tough competition in the space, though two concepts in one fund could be a winning proposition for IDAT, if it is ever approved.
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Global X Cloud Computing ETF (CLOU): ETF Research Reports
Defiance Next Gen Connectivity ETF (FIVG): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
