ETF Trends » PTE

Telecom ETFs On the Line When the Market Rebounds

Tom Lydon — Wed, 10 Sep 2008 20:00:10 +0000

It seems that telecom exchange traded funds (ETFs) have become disconnected for the year, with every company or holding in the negative zone. The last month hasn’t been as brutal for the bulk of this year has been for these funds, though.

Robert Holmes for The Street reports that each ETF holds so few companies that it could make the timeframe for a turnaround longer within these sector-targeted funds. The fewer the holdings, the more exaggerated the moves become for the ETF. Telecom has a tendency to do well when the market is healthy and do really poorly when things are going down.

Two stocks that are dominating this industry are Verizon (VZ) and AT&T (T). A large chunk of every telecom ETF is given to these companies. AT&T is down 19.1% year-to-date, while Verizon is off by 16.2%.

iShares Dow Jones U.S. Telecom (IYZ): AT&T is 21.4%; Verizon is 15.5%; down 20.4% year-to-date; down 0.1% for the last month
Vanguard Telecom Service (VOX): AT&T 20.8%; Verizon 19.9%; down 19.1% year-to-date; down 0.6% for the last month
Telecom HOLDRs (TTH): AT&T is 58.5%; Verizon is 24.3%; down 22% year-to-date; up 2.5% for the last month

A little more diversified is the PowerShares Dynamic Telecom & Wireless (PTE). Its top holding, American Tower Corp. (AMT), is 5.1% of the Fund. Verizon is 5.1%, and AT&T is 4.7%. Year-to-date, it’s down 17.9%, and in the last month it’s down 3.7%.

Telecommunications ETFs Phoning It In On AT&T Earnings

Tom Lydon — Wed, 23 Jul 2008 21:00:53 +0000

Growth in the wireless sector has telecommunications exchange traded funds (ETFs) ringing up good numbers today.

AT&T (T) announced today that its quarterly profit had gone up even more than expected, reports Ritsuko Ando for Reuters. The growth among its wireless subscribers compensated for the loss in traditional landlines. Analysts said they were still worried about that, as well as growth in the number of high-speed internet subscribers in the second quarter, which was weaker than expected.

AT&T gets a boost from its relationship with Apple (AAPL), as the exclusive U.S. carrier for the iPhone.

Another cell phone market player, however, hasn’t fared so well. Yesterday, Vodaphone (VOD) reported a disastrous second quarter, and its share price dropped 14% as a result, reports Stephen Beard for Marketplace. That prompted the company to buy back $2 billion of its stock to restore confidence.

The company was hit worst in Spain, where the collapse of the property market has left many people out of work, prompting them to leave the country and the Vodaphone network.

ETFs potentially affected:

iShares S&P Global Telecommunications (IXP): down 18% year-to-date; AT&T is 15.7% year-to-date; Vodafone is 12.4%
Telecom HOLDRs (TTH): down 22.7% year-to-date; AT&T is 58.5%
PowerShares Dynamic Telecom& Wireless (PTE): down 18.8% year-to-date; AT&T is 5.1%