Assets Under Management AUM

Communications ETFs fall to 18-month low ahead of big tech earnings

Nastassia Samal/iStock via Getty Images

Ahead of quarterly results from industry heavyweights Alphabet (GOOG) (GOOGL) and Meta platforms (Facebook), communications and telecommunications exchange-traded funds hit 18-month trading lows on Monday. The group has seen strong sales so far this year, with space representing the worst-performing market segment of the 11 S&P 500 sectors in 2022.

Falling to an 18-month low on Monday, the Vanguard Communication Services ETF (NYSEARCA:VOX), SPDR Communication Services Sector Fund (NYSEARCA:XLC), Fidelity MSCI Communication Services Index ETF (NYSEARCA: FCOM), and the iShares Global Telecom ETF (NYSEARCA:IXP).

VOX touched 105.80 per share, while XLC, FCOM and IYZ fell to 60.82, 40.09 and 27.71 per share, respectively. The four funds haven’t traded this low since early November 2020.

Big tech is set to report its first quarter results this week, with titles like Alphabet (GOOG) (GOOGL) and Meta Platforms (FB) set to report Tuesday and Wednesday. GOOG and FB will have major implications on downed XLCs, VOXs, FCOMs and IXPs. The two stocks represent between 34% and 43% of the four ETFs above.

XLC has a combined weight of 42.7%: GOOG 22.82% and FB 19.88%.

FCOM has a combined weighting of 36.78%: GOOG 23.25% and FB 13.53%.

VOX has a combined weighting of 36.31%: GOOG 22.98% and FB 13.33%.

IXP has a combined weighting of 34.40%: GOOG 22.45% and FB 11.95%.

See a full schedule of big tech earnings this week as well as any other exchange-traded funds that may be impacted by the reports.

Direct comparison

Although all four funds offer investors exposure to the communications/telecoms sector, they have many important differences. The differentiation is in areas such as assets under management, expense ratios, number of holdings and performance.

AT M : XLC leads with $10.64 billion under its belt, while VOX comes in second with $3.41 billion. FCOM and IXP are the smallest funds with $669.78 million and $205.01 million in assets under management.

Cost: FCOM is the most profitable fund with an expense ratio of 0.08%. Not far away are XLC and VOX with spend ratios of 0.10%. IXP, on the other hand, is the most expensive of the bunch with a cost ratio of 0.43%.

Assets: The top two holdings of the four funds are GOOG and FB, but FCOM and VOX offer the broadest sector exposure with 114 holdings and 110 holdings. IXP is also diversified with 98 holdings compared to XLC’s highly concentrated 28 holdings.

Performance: All four funds provided roughly the same returns in 2022 of -21%but over a three year period XLC is +24.2%VOX is +20.9%FCOM is +19.8%and IXP is +13.5%.

For a better look at how these four funds compared, check out Seeking Alpha’s quantitative and fundamental analysis of each ETF.