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Quikro ETF: Analysis suggests EPS growth

Quikro ETF: Analysis suggests EPS growth of around 79% for constituents of thematic ETF focusing exclusively on digital infrastructure and connectivity

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Omar ElKheshen, CEO of Quikro


  • That equates to a compound annual growth rate of 15.6%, well above the 9.2% for the S&P 500 and 11-12% CAGR to be had with investment products that centre on the cybersecurity industry

New analysis 1 of the 77 companies in the Tematica BITA Digital Infrastructure and Connectivity Index (TBDIGI) reveals that in aggregating their forward EPS expectations, the basket is expected to grow its pool of earnings by roughly 79% over the 2019-2023 period. That equates to a compound annual growth rate of 15.6%, well above the 9.2% for the S&P 500 and 11-12% CAGR to be had with investment products that centre on the cybersecurity industry.

TBDIGI is tracked by The Digital Infrastructure and Connectivity UCITS ETF (DIGI), a thematic ETF focusing on digital infrastructure and connectivity. It is sponsored by Quikro, and is listed across several European exchanges, including the London Stock Exchange, via the HANetf platform.   The ETF captures companies that are positioned to benefit most from the explosive growth of the digital infrastructure virtuous circle of expanding users, data, applications, and bandwidth.   Year to date, it has delivered growth of 9.79%, and 24.76% since its launch in October 2020.

Omar ElKheshen, CEO of Quikro said: “A combination of more companies pushing out expected dates for workers to return to the office, millions of employees around the world relocating and exponential growth in remote work requests has accelerated the reliance on the digital infrastructure. So too have advances in video communication, prompting many companies to re-think the need for business travel.

“Digital infrastructure remains a strong growth market.”

The Digital Infrastructure and Connectivity UCITS ETF (DIGI) points to research firm Gartner, which  now forecasts 5G infrastructure revenue hitting $19.1 billion in 2021, up from $13.8 billion last year, and increasing to $23.3 billion in 2022. Key to this will be the shift in spending from 3G and 4G technologies, which combined are expected to drop to $13.2 billion in 2022 from $20.3 billion in 2020.

Data from the Global mobile Suppliers Association shows that as of late August, 176 operators across the globe have launched one or more 5G services while 461 operators in 137 countries are investing in 5G, including trials, acquisition of licenses, planning, network deployment, and launches. 

The Digital Infrastructure and Connectivity UCITS ETF (DIGI) says the same is true for the 5G device market. Research firm Omdia shared that its latest forecast now predicts 5G smartphones doubling their market share this year relative to the overall smartphone market.

Omar ElKheshen said: “If we trace back the evolution of 3G and 4G phones, we see the same pattern and the driver for it then is the same as it is today – the price point for 5G smartphones is falling from premium and super-premium to mid-and lower-tier smartphones.”

Omdia predicts the share of 5G smartphones will reach 43% of the overall market in 2021 compared to 19% in 2021.

Grandview Research sees the continued demand by enterprises for cloud computing as well as the continued increase in data consumption leading to continued data centre construction in the coming years. It forecasts the market will grow to $340 billion in 2027, 64% larger than it was in 2019.

The Digital Infrastructure and Connectivity UCITS ETF (DIGI) focuses on six key sub-themes which follow the journey of data as it travels from storage to end-user:

  • Data centres
  • Digital connectivity
  • Data networks
  • Digital transmission
  • Digital processing
  • Digital services and intellectual property

While other investment strategies may focus on the build-out of single digital segments such as 5G or cloud or telemedicine, the Digital Infrastructure and Connectivity UCITS ETF (DIGI) seeks to capture the explosive growth in data traffic across all digital segments as next-generation connective technologies roll out, resulting in ever-increasing demand for better digital infrastructure and connectivity solutions.

Source : ETFWorld.co.uk

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