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  • Fund Watch
  • disruptive innovation
  • robotics

Can the SNSR ETF for connected devices keep rising?

The Internet of Things is tipped by some to be the future of a myriad of sectors, from healthcare to transport and retail. The Global X Internet of Things ETF [SNSR] provides exposure to companies that could make the next best thing in their field.

The Internet of Things market is pegged by some analysts as one that will lead the global business recovery from the COVID-19 pandemic.

A new report from ResearchAndMarkets.com titled “Global Internet of Things Market and Trends 2021” shows that the value of the international Internet of Things (IoT) market would cross $1trn by 2024. The number of connected devices, it added, is set to reach nearly 30 billion.

 

IoT Growth

“Around half of global companies’ senior executives strongly believe that the IoT market would play a crucial role in supporting companies in their recovery after Covid-19,” the report stated.

The IoT is a system of interrelated computing devices, mechanical and digital machines with unique identifiers allowing for the transfer of data over a network without human-to-computer interaction.

At present, it is mainly used in transportation equipment, machinery manufacturing, computing, and electronic products.

The increase in demand is set to further lift the Global X Internet of Things ETF. Its share price has climbed 18.08% over the last 12 months (as of Friday 26 November’s close).

“Around half of global companies’ senior executives strongly believe that the IoT market would play a crucial role in supporting companies in their recovery after Covid-19” - report from ResearchAndMarkets.com

 

SNSR

The SNSR was launched in 2016. It invests in companies that stand to benefit from the broader adoption of IoT, enabled by technologies such as WiFi, 5G telecommunications infrastructure, and fibre optics. This includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet.

“Accurately capturing firms leading in disruptive themes requires a forward-looking investment approach to identify the fast-growing trends of the next decade,” said Rob Oliver, head of business development in Europe at Global X.

The SNSR has a year-to-date total daily return of 21.95% according to Yahoo Finance and net assets of $529.2m.

It has 47 holdings of which Dexcom [DXCM], which develops, manufactures, and distributes continuous glucose monitoring systems for diabetes management, has the biggest weighting with 7.76%.

Electronics and semiconductor maker ST Microelectronics [STM.FP] is next with 7.33%, followed by GPS technology firm Garmin [GRMN] with 5.49% and IoT solutions provider Advantech [2395.TT] with 5.46%.

“Accurately capturing firms leading in disruptive themes requires a forward-looking investment approach to identify the fast-growing trends of the next decade” - Rob Oliver

 

Dexcom Demand

Shares in Dexcom have surged 70.88% over the last 12 months (as of 26 November’s close), as its G6 Continuous Glucose Monitoring System for diabetes patients proved particularly effective in the pandemic. The device sends patient data to a remote handheld mobile device and allows nurses to monitor the process at a safe distance.

Dexcom believes there is a huge market opportunity for the device post-COVID since diabetes is in the US tipped to rise by 38% to reach 15.3% of the population by 2030, according to the Institute for Alternative Futures. The Global Diabetes Care Devices market, with rising number of diabetes cases in China and India as the middle class grows and eats richer foods, is set to rise at a compound annual growth rate of 6% between 2018 and 2027.

Another star performer in the SNSR is Advantech, whose share price has risen 21% over the last 12 months (to 26 November’s close). It has been boosted by demand for its products, from interactive touchscreen kiosks to traffic management controlling systems.

 

Semiconducting

ST Microelectronics is benefiting from providing the chips for a multitude of IoT computing and electronic products. Its shares have soared 23.48% in the last 12 months benefiting – despite the global semiconductor shortage - from surging demand.

Global sales of semiconductors totalled $144.8bn in the third quarter this year, up 27.6% year over year, according to the Semiconductor Industry Association.

All three of these stocks could be set to keep the SNSR powering next year, although interested investors may also want to keep an eye on software group PTC Inc [PTC] with a 0.88% weighting, whose shares have fallen 30.62% since mid-July (as of 26 November’s close).

PTC has been tipped by Bryn Mawr Trust’s Jeff Mills to potentially bounce back. “They do all sorts of things in the industrial internet of things,” he told CNBC. “That’s going to be extremely important for companies throughout the world.”

Disclaimer Past performance is not a reliable indicator of future results.

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