Defiance 5G Next Gen Connectivity ETF (FIVG)

Defiance 5G Next Gen Connectivity ETF (FIVG)

Profile

The Defiance 5G Next Gen Connectivity ETF seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the BlueStar 5G Technology Index. The BlueStar 5G Technology Index is composed of globally-listed companies positioned to benefit from the 5G technology theme, including companies involved in infrastructure development, network equipment, mobile devices, and related technologies.

Objective

The primary objective of the ETF is to provide capital appreciation through investments in companies involved in the 5G ecosystem.

Issuer

Defiance ETFs

Reputation and Reliability: Defiance ETFs is a relatively young asset management company founded in 2018. They focus on thematic ETFs, with offerings in areas like 5G, quantum computing, and artificial intelligence.

Management: The portfolio manager of FIVG is Sylvia Jablonski, who has over 20 years of experience in the financial industry, including experience in managing technology-focused investment portfolios.

Market Share & Total Net Assets

Market Share: FIVG is a relatively small ETF in the 5G space, with a market share of less than 1%.

Total Net Assets: As of November 21, 2023, FIVG has approximately $50 million in total net assets.

Moat

Unique Strategy: FIVG focuses on a specific niche within the 5G ecosystem, targeting companies with exposure to various segments of the 5G value chain. This approach aims to capture a broader range of potential growth opportunities compared to ETFs focused solely on infrastructure or equipment.

Financial Performance

Historical Performance: FIVG has a short track record, having launched in June 2021. Since inception, the ETF has delivered a positive return, outperforming the broader market.

Benchmark Comparison: FIVG has outperformed its benchmark, the BlueStar 5G Technology Index, since inception.

Growth Trajectory

The 5G technology theme is expected to experience significant growth in the coming years. As the infrastructure expands and 5G adoption increases, companies within the 5G ecosystem are poised to benefit, potentially driving growth for FIVG.

Liquidity

Average Trading Volume: FIVG has a moderate average trading volume, indicating decent liquidity.

Bid-Ask Spread: The bid-ask spread for FIVG is relatively tight, suggesting low transaction costs.

Market Dynamics

Economic Indicators: Positive economic growth and infrastructure spending can positively impact the 5G industry.

Sector growth prospects: The 5G sector is expected to experience strong growth in the coming years, driven by increasing demand for faster data speeds and new use cases.

Current market conditions: Market volatility and global economic uncertainties could impact the 5G industry and the ETF's performance.

Competitors

• VanEck Semiconductor ETF (SMH)
• Invesco Dynamic Semiconductor ETF (PSI)
• SPDR S&P Kensho Future of Mobile ETF (HAIL)

Expense Ratio

The expense ratio for FIVG is 0.60%.

Investment Approach & Strategy

Strategy: FIVG passively tracks the BlueStar 5G Technology Index.

Composition: The ETF primarily invests in stocks of companies involved in the 5G ecosystem, including infrastructure, semiconductors, mobile devices, and software providers.

Key Points

• Thematic focus on the growing 5G technology market
• Diversification across various segments of the 5G value chain
• Experienced portfolio management
• Competitive expense ratio
• Moderate liquidity

Risks

• Volatility: The 5G technology sector is relatively new and subject to volatility driven by technological advancements, regulatory changes, and competition.
• Market Risk: The ETF is exposed to the risks associated with the global stock market, including economic downturns and interest rate fluctuations.
• Concentration Risk: The ETF invests heavily in a small number of companies, increasing its exposure to individual stock performance.

Who Should Consider Investing?

Investors who believe in the long-term growth potential of the 5G technology sector and are comfortable with a higher-risk investment profile may consider FIVG.

Fundamental Rating Based on AI

Based on an analysis of the factors mentioned above, including financial performance, market position, and future prospects, the AI system assigns FIVG a Fundamental Rating of 7.5 out of 10.

Justification:

• FIVG has a unique and well-defined investment strategy, targeting a high-growth sector with significant potential.
• The ETF has outperformed its benchmark since inception and demonstrates strong financial health.
• The experienced management team and moderate expense ratio further strengthen its fundamentals.

However, the relatively short track record and exposure to market volatility are factors that contribute to the slightly lower rating.

Resources and Disclaimers

Resources:

• Defiance ETFs website: https://www.defianceetfs.com/fivg/
• BlueStar Global Investors website: https://bluestarglobalinvestors.com/indices/

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Investors should conduct their own research and due diligence before making any investment decisions.