Back to top

Image: Bigstock

Should You Invest in the iShares Global Telecom ETF (IXP)?

Read MoreHide Full Article

The iShares Global Telecom ETF (IXP - Free Report) was launched on 11/12/2001, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Telecom segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Telecom is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $291.64 M, making it one of the average sized ETFs attempting to match the performance of the Technology - Telecom segment of the equity market. IXP seeks to match the performance of the S&P Global 1200 Telecommunications Services Sector Index before fees and expenses.

The S&P Global 1200 Telecommunications Services Sector Index measures the performance of companies are part of the telecommunications sector of the economy and are important to global markets.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.47%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 4.03%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Looking at individual holdings, Facebook Class An Inc accounts for about 11.13% of total assets, followed by Alphabet Inc Class C (GOOG - Free Report) and Alphabet Inc Class A (GOOGL - Free Report) .

The top 10 holdings account for about 67.53% of total assets under management.

Performance and Risk

The ETF has lost about -2.45% so far this year and is down about -0.10% in the last one year (as of 10/03/2018). In that past 52-week period, it has traded between $53.77 and $62.51.

The ETF has a beta of 0.65 and standard deviation of 12.32% for the trailing three-year period, making it a medium risk choice in the space. With about 87 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Global Telecom ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IXP, then, is not the best option for investors seeking exposure to the Telecommunication ETFs segment of the market. However, there are better ETFs in the space to consider.

Vanguard Communication Services ETF (VOX - Free Report) tracks MSCI US Investable Market Telecommunication Services 25/50 Index and the Communication Services Select Sector SPDR Fund (XLC - Free Report) tracks COMMUNICATION SERVICES SELECT SECTOR IND. Vanguard Communication Services ETF has $1.21 B in assets, Communication Services Select Sector SPDR Fund has $1.98 B. VOX has an expense ratio of 0.10% and XLC charges 0.13%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.