If you’ve been viewing telecommunications and technology exchange traded funds (ETFs) as separate investments, it might be time to consider how they can work together.
Telecom is a dividend play, making it appealing for investors looking for an alternative to the bond stampede. Technology, in contrast, offers relatively rapid earnings growth and a chance to ride a wave of merger-and-acquisition activity, reports Jonathon Burton for MarketWatch. [Semiconductors Hit the Refresh Button.]
Together, says Burton, telecom and tech give investors a “barbell” approach to the market: growth on one side, dividends on the other. While tech offers cash-rich companies and more stability, telecom yields better.
There are nearly two dozen technology ETFs in the ETF Analyzer, including these long-only and leveraged plays:
- PowerShares QQQ (NYSEArca: QQQQ)
- SPDR Technology Select Sector ETF (NYSEArca: XLK)
- iShares Dow Jones U.S. Technology Sector Index ETF(NYSEArca: IYW)
- Direxion Daily Technology Bull 3x Shares (NYSEArca: TYH)
As a sign of the increasing amount of crossover seen between the two industries, a long-rumored Verizon/Apple deal may be coming to fruition. Miguel Helft for The New York Times reports that after more than three years of using only AT&T cellphone networks, Apple is now making a version of the iPhone 4 for Verizon’s network, according to a person who is in direct contact with Apple. [Are International Telecom ETFs A Better Bet?]
There are a number of telecom ETFs to choose from, too; look under the hood by visiting the ETF Resume to see which ones might give the best exposure to both industries:
- PowerShares Dynamic Telecom (NYSEAca: PTE)
- Vanguard Telecom (NYSEArca: VOX)
- iShares Dow Jones U.S. Telecommunications Index Fund (NYSEArca: IYZ)
Tisha Guerrero contributed to this article.