Exchange Traded Funds (ETFs)

ETF Talk: Tapping into the Power of Language with This Communications ETF

While Charles Dickens’s famous statement, “It was the best of times, it was the worst of times,” does not quite describe where we currently stand, we are rapidly approaching one of the best times of the year for communication — we are nearing the time for an annual event by my good friend and Fast Money Alert co-writer Dr. Mark Skousen. Debate, discussion and good conversation reign at FreedomFest (and if you haven’t bought your ticket yet, why haven’t you?). As for one of the worst of times — consider the upcoming presidential election, which features candidates that polls indicate generally are not popular with voters.

As any reader of The Deep Woods knows, I am a fervent supporter of effective communication. The power that such a skill can bring to bear in almost every aspect of our daily lives is immense. Indeed, I strongly believe that effective communication skills are a potent antidote to the political polarization that is currently endemic in America.

However, one can make a case that Dickens’s famous opening line from “A Tale of Two Cities” does describe the status of the telecommunication sector. According to Zacks’ analyst Supriyo Bose, the telecommunications sector as a whole is suffering from several problems, including the ongoing conflicts in the Middle East and Russia’s ongoing invasion of Ukraine which are causing supply-chain disruptions and high customer inventory levels.

However, that does not mean that we should flee telecommunications and never look back. After all, our need, as humans, to communicate is still as prevalent as ever, and the sector continues to grow. Indeed, Supriyo Bose concurs with this trajectory, pointing to the continuing rise in 5G and increased fiber densification as signs of a vibrant sector. This is a key piece of evidence as to why exchange-traded fund (ETF) Vanguard Communication Services Index Fund ETF (NYSEARCA: VOX) had a very strong first quarter.

Exclusive ETF Talk: Strike Oil While the Market’s Hot!

VOX is an ETF that tracks the performance of a benchmark index that measures the investment return of communication services stocks. However, its basket is not limited to just telephone, data-transmission, cellular and wireless communication services. It will also happily include companies that are centered around digital communication as well.

Some of the firms in VOX’s portfolio include Meta Platforms (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL)/(GOOG), Verizon (NYSE: VZ), Netflix, Inc. (NASDAQ: NFLX), Comcast (NASDAQ: CMCSA), Walt Disney Co. (NYSE: DIS), AT&T (NYSE: T) and T-Mobile (NASDAQ: TMUS).

As of April 23, VOX has been down 1.04% over the past month and down 6.42% for the past three months. It is currently up 10.60% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $3.9 billion in assets under management and has an expense ratio of 0.10%.

Overall, the VOX ETF may be a good choice for investors looking for exposure to the telecommunications sector, but it’s important to carefully consider the risks and potential returns before making any investment decisions.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.