Market Overview

Five Telecom ETFs Your Broker Forgot to Mention


Keeping with the theme of trying to play some defense in an environment of elevated equity correlations, we're following up our look at forgotten consumer staples ETFs by looking at another sector cherished for its defensive traits: Telecom.

While the divergence between Dow components AT&T (NYSE: T) and Verizon (NYSE: VZ) and the S&P 500 isn't startling, on a year-to-date basis, both stocks have outperformed the broader market.

Maybe it's time for investors to capture some yield, play some defense and outperform, albeit slightly, the broader market with some telecom ETFs. Here are a few we have a feeling your broker forgot to tell you about.

Vanguard Telecommunications Services ETF (NYSE: VOX): The Vanguard Telecommunications Services ETF is home to 36 stocks and all the big boys of the U.S. telecom industry are found in this ETF. As is par for the course in many U.S.-focused telecom ETFs, VOX's top-10 holdings account for a huge share of the ETF's weight. In this case, we're talking about nearly 71%. On the bright side, VOX features a scant 0.24% expense ratio.

iShares MSCI ACWI ex-US Telecom Services Index Fund (NYSE: AXTE): Compared to VOX, AXTE will cost you twice as much in fees (0.48%), but give you exposure to almost twice as many stocks (71) all hailing from outside the U.S. Given the robust yields found on many European telecom names, it's surprising AXTE hasn't attracted more than $2.7 million in assets under management. The ETF is still just 14 months old.

SPDR S&P International Telecommunications Sector ETF (NYSE: IST): Apparently, investors really haven't dialed up international telecom ETFs because IST, which is barely different than AXTE, has just over $12 million in AUM. The SPDR offering is home to about 45 stocks and an expense ratio of 0.5%.

iShares S&P Global Telecommunications Sector Index Fund (NYSE: IXP): Home to 40 stocks and an expense ratio of 0.48%, IXP is one of the better bets for investors looking for global telecom exposure beyond Europe. Japan, Mexico, China and Australia account for about a quarter of this ETF's weight and maybe that's why it has nearly $400 million in AUM.

ProShares Ultra Telecommunications (NYSE: LTL): Yep, there really is a leveraged telecom ETF. If you're anxious to quickly juice up your telecom returns, LTL is your weapon of choice. For a bearish play, try the ProShares UltraShort Telecommunications (NYSE: TLL), but be advised both ETFs are thinly traded.

Posted-In: Long Ideas News Sector ETFs Short Ideas Dividends Specialty ETFs Intraday Update Markets


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