It may not be new, but one of the best modern-day examples of disruptive technology is the smartphone. It is a technology that has radically disrupted human behavior and changed how we live our daily lives. The smartphone has not merely replaced the need for landline phones but changed how we engage with the world from social media to online shopping to digital photography to video to music consumption to payment. It can even monitor your heart rate and start your car.
Globally, there are approximately 6.84 billion smartphones. To put that in perspective, that accounts for 85% of the global population. China has the most smartphone users (63.8% penetration), followed by India (45.7% penetration), and then the United States (73.7% penetration). While the global numbers are staggering, there are still people in the world who do not and cannot have access to a smartphone because 1.1 billion people (1 in 8 people) still do not have access to electricity. Smartphones are also a gateway to financial inclusion for underserved populations.
Who are the main players in the smartphone supply chain ecosystem? According to Oberlo, Apple (28%) and Samsung (24%) have the greatest market share, and Chinese brand Xiaomi (11.2%) comes in third.
So, How do you Best Play This Disruptive Investment Trend as an Investor?
Interestingly, there is no longer a “smartphone ETF”. First Trust’s Smartphone ETF is now the First Trust Indxx NextG ETF (NXTG), joining the Defiance Next Gen Connectivity ETF (FIVG) as an ETF play on 5G networking and communications technology. Another smaller ETF is the AXS Esoterica NEXTG Economy ETF (WUGI). These products seem more focused on cellular technology and providers than mobile applications.
The Global X Internet of Things ETF (SNSR) has been around since 2016, and it is another way to get exposure to all internet-enabled devices. The fund includes exposure to smart home, wearable, and smart grid devices and applications.
The next generation of the internet of things is the “metaverse”, a broad term that refers to the idea of a digitally interconnected, interactive, and immersive experience where people can communicate and socialize on the internet. Global X has the Global X Social Media ETF (SOCL) that provides social media exposure but it also has the Global X Metaverse ETF (VR). Other metaverse ETFs include the Roundhill Ball Metaverse ETF (METV), Fount Metaverse ETF (MTVR), First Trust INDXX Metaverse ETF (ARVR), and ProShares Metaverse ETF (VERS).
Mobile Payment & Commerce
Another interesting investment pivot using smartphones is mobile payment. The ETFMG Prime Mobile Payments ETF (IPAY) holds companies involved with mobile payment applications. The Amplify Online Retail ETF (IBUY), the largest online retail ETF, provides additional exposure to mobile commerce, which, according to Statista Market Insights, makes up 60% of e-commerce sales around the world, equating to $2.2 trillion in 2023.
And finally, now that the iPod has become obsolete, smartphones have become mobile music devices, streaming music players with Bluetooth connectivity to speakers and headphones. The MUSQ Global Music Industry ETF (MUSQ) provides pure-play exposure to the global music industry, including music streaming stocks such as Spotify, Apple Music, YouTube Music, and China streaming music services Tencent Music and NetEase Cloud Music.
Smartphones have become so ubiquitous that you may take them for granted, but their disruptive capabilities and growth potential remain relevant to thematic investing.
For more news, information, and strategy, visit the Disruptive Technology Channel.
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