Broker Check

Breaking Down 5G Investing

| October 21, 2019

The world is about to change.

I’ve written about the coming 5G revolution, describing how it will enable widespread innovation, and how the buildout could be rewarding for investors as well.

The pace of change will be rapid, and it’s already started. The effects of 5G will be far-reaching, covering an array of industries and technologies – some of which haven’t been developed yet. Here are just a few:

In fact, we believe in the opportunity so much we are adding 5G specific positions to our model portfolio. In this post, I want to detail more how Cornerstone is approaching 5G investments.

An Opportunity in Its Infancy

We’ve been researching investment opportunities, trying to determine the right ways to provide exposure to companies actively investing in research and development around 5G technologies. The reason for this is the $850 billion of global economic value is expected from the development and deployment of 5G technologies from 2018-2023, according to the GSMA Mobile Economy Report 2019 (pdf).

From 2018-2020 alone, $480 billion is expected to be invested for mobile-related capital expenditures. Most profoundly, the GSMA report says 5G will contribute $2.2 trillion to the worldwide economy over the next 15 years.

The rollout has already begun in the U.S., South Korea, Switzerland, Japan, Saudi Arabia, and many other places. And through the end of this year, China, Hong Kong, Australia, and others will be well on their way too.

We’re still in the early stages of this opportunity, but the ball is already rolling.

A Diverse Approach to 5G

In our opinion, it’s unwise to try cherry-picking future winners. Instead, our approach is one of diversity that fits within the philosophy of our firm and uses a data-driven methodology to analyze a wide range of possible investments.

Our current eligibility criteria for investments in our 5G funds include these critical factors:

  • Size/market capitalization
  • Liquidity
  • Transparency of any underlying securities

We’ll use these data to select securities and their respective weights within our portfolios. We’ll also break the investments into different classifications within the 5G ecosystem, including:

  • Data center Real Estate Investment Trusts (REITs)
  • Cell tower REITs
  • Equipment manufacturers
  • Networking testing and validation software firms
  • Mobile phone manufacturers
  • Telecommunications service providers

New Way of Life

Most analysts compare where we are right now with the late 1990’s in terms of the technological boom that’s unfolding.

I don’t mean the flashiness of the dot-com boom and bust, but how the foundations were laid for a new way of technological life.

We believe the widespread adoption of 5G will have a similar effect.

We’ll have a lot more in the future about 5G. As for now, our 5G position in our model investment portfolios roll out in the fourth quarter of 2019, because as mentioned, the revolution has already begun.

Securities sold through CoreCap Investments, Inc., a registered broker-dealer and member FINRA/SIPC; advisory services offered by CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial and CoreCap are separate and unaffiliated entities.