Thematic ETFs are gaining popularity as technology takes over the world. But one, in particular, is outperforming the competition. The WUGI ETF is up over 27% this year, with 5G slowly replacing older versions.

The Esoterica NextG Economy ETF (WUGI) is focusing on capturing growth in the digital economy. In particular, WUGI ETF invests in companies leading the way for 5G technology.

With this in mind, the ETF invests in stocks powering 5G like chipmakers. Not only that, but the fund manages a diverse portfolio of both growth and value stocks with varying market caps.

Despite growth stocks underperforming recently, WUGI is rolling full steam ahead. Using a unique analysis approach, WUGI is exceeding expectations.

The 5G market is expanding rapidly, with forecasts predicting almost 60% annual growth. Can WUGI ETF continue its hot streak? Let’s see what the fund consists of and how it compares to the competition.

How WUGI ETF Invests In 5G Technology

If you are looking to capture 5G growth, WUGI ETF holdings are tied to the growing market. That said, the 5G market will have heavy competition looking to bump others out of the arena. As a result, there will be clear winners and losers.

Even though wireless carriers like Verizon (NYSE: VZ) are the biggest names in 5G, they may not be the best way to capture growth.

Having said that, the companies creating the technology making 5G possible will be the biggest winners. WUGI analysts are researching the two biggest markets, the U.S. and Asia to identify leaders.

The ETF approaches its investments from both the top-down and bottom-up by finding fairly valued leaders.

At the same time, technology is rapidly evolving, and leaders can change, making active management a priority. The fund managers look for investments in four main sectors:

• New Semiconductors
• Cloud & Edge Computing
• SAAS and,
• Enabling Technology

This idea is that every 5G device will need a new semi to run on. So, chipmakers are a critical part of the future of communication. In fact, they are powering most of the industries experiencing rapid growth. Those industries include the metaverse and self-driving cars.

On top of this, edge computing is proving to be superior as companies use massive amounts of data to gather consumer info. Not only that, but with 5G expanding around the globe, there’s more data than ever. And as a result, companies with the ability to filter this information will have a major advantage.

Top Holdings

With the ETF focusing on 5G, the portfolio consists of over 60% technology stocks. So far, the fund has over 45 million assets under management (AUM).

The WUGI ETF currently has 33 holdings. Here are the top ten.

• Advanced Micro Devices (Nasdaq: AMD): 8.65%
• Nvidia (Nasdaq: NVDA): 8.12%
• Sea LTD (NYSE: SE): 7.57%
• Meituan (OTC: MPNGF): 5.91%
• Marvell Technology (Nasdaq: MRVL): 5.65%
• Qualcomm Inc (Nasdaq: QCOM): 5.38%
• Bilibili Inc (Nasdaq: BILI): 4.47%
• Taiwan Semiconductor Manufacturing Co. (NYSE: TSM): 3.99%
• Alphabet Class C (Nasdaq: GOOG): 3.90%
• Microsoft (Nasdaq: MSFT): 3.67%

As you can see, the portfolio is heavily investing in technology with a focus on semiconductors. Another key point is the regions it participates in, with the top four holdings operating in the U.S, China, and Singapore.

Furthermore, these are companies leading the world into the future of technology. Making up over 57% of the portfolio, the top ten holdings are driving the ETFs returns this year.

Despite some exposure to an underperforming China market, stocks like AMD (+66%YTD) and NVDA (+135%) are pushing WUGI higher.

How Does WUGI ETF Compare to Other ETF’s

As a thematic ETF, WUGI focuses on a specific stock market theme. In WUGI’s case, the fund invests in 5G and related tech.

Compared to other popular thematic ETFs like the Ark Innovation ETF (NYSE: ARKK), WUGI is outperforming. While WUGI ETF is up over 27%, ARKK is down 20%. But if you compare the two assets from WUGI’s start, they have similar returns with WUGI +164% and ARKK +146%.

While ARKK has cooled off after a strong 2020, WUGI continues breaking out into ATH territory. At the same time, several of ARKKs top holdings are down, with pandemic plays losing investor interest.

For instance, stocks like Roku (-28%), Teladoc Health (-53%), and Zoom (-48%) are all down majorly after seeing their values soar in 2020.

The ARKK ETF is also actively managed while focusing on “disruptive innovations” like AI, and EVs. Both ARKK and WUGI ETF have an expense ratio of 0.75%, which is on the higher end.

Yet ARKK manages a lot more assets than WUGI does. At the time of this writing, ARKK has 25.52 billion net assets, while WUGI has $51.79 million. And on top of this, ARKK is much more heavily traded. It has an average daily volume of 8.43 million compared to 3.2K for WUGI ETF.

How Does WUGI ETF Look Long Term

Considering the companies that make up the majority of WUGI ETF, the fund has incredible potential. With AMD, Nvidia, and Sea Ltd making up nearly a fifth of the portfolio, investors are looking forward to the coming digital movement.

Not to mention the ETF has a large interest in TSMC, the largest foundry in the world. Being a foundry, TSMC supplies chips for brands like Apple, Nvidia, and Intel. This is significant with most new technologies requiring newer, updated chips.

Altogether WUGI is investing in the future of communication by focusing on the 5G market. More importantly, the companies WUGI invest in are leading technology into the future with their products.

At the same time, the fund is heavily concentrated in technology and particularly semiconductors. If the sector sees weakness, the fund could underperform as well.

Looking ahead, WUGI ETF looks to be in a solid position to capture the growing 5G market. Instead of trying to pick the winners, WUGI offers a broad investment option.