5G Digital Infrastructure ETF Report | March 2024

5G ETF Key Takeaways

  • Digital Infrastructure and Connectivity companies, along with the rest of the equity market, rebounded from the January 1.50% drawback to post a 6.86% gain. From an advance/decline perspective, there was a fair amount of participation as 39 names saw gains while 20 lost ground during the month.
  • Digital Processing and Digital Solutions & IP led sectors in February, combining to contribute to roughly 85% of period returns.
  • The list of top ten contributors to performance in February saw strong representation from those two sectors with Digital Connectivity names filling out the balance of names.
  • While Digital Processing names like Nvidia (NVDA) [28.58%] and Advanced Micro Devices (AMD) [14.81%] may have dominated headlines, Digital Solutions & IP names like Super Micro Computer (SMCI) [63.54%] and Bandwidth (BAND) [48.41%].
  • Digital Transmission was the only lagging segment. Detractors from performance included Commscope Holdings (COMM) [-49.78%] as well as Data Networks name Lightspeed Commerce (LSPD) [-24.37%].

Source of all performance data: Tematica Research / Bloomberg. Data as of 29.02.2024. Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.

Macro Outlook

The main driver of this strategy is the Virtuous Circle of capacity creating opportunity and opportunity, once seized, prompting the need for more capacity. As thematic researchers, we break the economy into three components: consumers, corporations, and public policy. When we see consumers and corporations pulling in the same direction, we know we have a solid investing theme. When public policy joins them, setting performance thresholds or providing development incentives such as public works projects, the momentum of all three creates powerful thematic tailwinds, precisely what we see for digital infrastructure development.

There is no doubt that AI is dominating both headlines and earnings releases and there are certain index constituents that are benefiting from this attention. While this technological (r)evolution is exciting and full of promise, we haven’t lost sight of all the other technologies and geographies that are quietly working their way through their own Virtuous Circles. 5G and its continued global buildout (and evolution to 6G), Wi-Fi 6 and its transition to Wi-Fi 7, the continuing adoption of IoT (both consumer and industrial), autonomous vehicle development (again, both consumer and industrial), and the adoption of faster and more robust data center technology, to name a few.

These and other developments keep us optimistic that while we are going through some economic uncertainty, we remain excited about funding beginning to flow for promised infrastructure spending. That legislation and other bills will spur more demand for bandwidth, processing, and storage and reinforce the Virtuous Circle. This focus on the development of a nation’s digital infrastructure as vital to its future competitiveness is evident in many countries around the world, and as we look forward to emerging technologies, it will only become more critical.

5G ETF Performance Table
As of 29.02.2024

1M3M6MYTD12M3YSI
Digital Infrastructure and Connectivity UCITS ETF 6.80%15.32%14.28%5.15%23.57%0.07%22.03%
Tematica BITA Digital Infrastructure and Connectivity Index6.86%15.51%14.89%5.26%24.47%2.01%24.94%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 29/02/2024.

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs your capital is at risk.

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