ETFs Aren't Lovin' Good Earnings Numbers from McDonalds, AT&T

Despite positive numbers from both AT&T (T) and McDonald's (MCD), the exchange traded funds (ETFs) that count them as major components seem to be unmoved by the news.

AT&T reported that its first quarter profit was up 22%, mostly because of strong wireless growth, reports Peter Svensson for the Associated Press. Its wireless division added a net 1.3 million subscribers in the quarter.

While AT&T is trading higher midday, ETFs holding the company aren't so far:

• iShares Dow Jones US Telecommunications (IYZ): AT&T is 23.3%, down 18.8% year-to-date
• iShares S&P Global Telecommunications (IXP): AT&T is 17%, down 10.3% year-to-date
• Technology Select Sector SPDR (XLK): AT&T is 9.6%, down 10% year-to-date

Meanwhile, McDonald's also reported first-quarter profit growth of 24% based on strong international sales. Between January and March, it earned 81 cents per share compared with 62 cents per share during the same period last year. Those numbers blew the forecast of 70 cents per share clear out of the water.

The PowerShares Dynamic Food and Beverage (PBJ) fund was slightly lower midday, though. McDonald's is 4.9% of the fund, which is down 1.4% year-to-date. The fast food company is also 5% of the PowerShares Dynamic Leisure & Entertainment (PEJ), which is down 6.6% year-to-date.

If Investment Remains Solid, Infrastructure ETFs Could Gather Strength

An exchange traded fund (ETF) can be a better proxy for a sector than a single stock. It takes the guesswork right out of investing.

Diversification is another element that is added when using ETFs instead of a single stock within a portfolio. An example is the GE (GE) stock that missed its numbers by a long shot late last week. While media has been a weak performer so far this year - PowerShares Dynamic Media (PBS) is down 10.4% year-to-date - and the financials are tough, there could be other reasons to own GE. The company, after all, wears many hats.

How about infrastructure?, asks Roger Nusbaum for Seeking Alpha. The infrastructure sector can cover a wide range of things, including roads, airports, utilities, information technology and other channels of communication. Breakdowns in some of these areas can lead to major disruptions in a country, as seen when China experienced a record snowfall this winter.

Globally, billion upon billions will be spent on infrastructure over the next decade or two. It is reasonable to assume that stocks in this sector will do well, wait until these funds move back above their trend lines before diving in. Countries and regions such as South Africa, Latin America and China are making infrastructure improvements a particular focus in the coming years.

Build up your portfolio's inner strength with:

• iShares S&P Global Infrastructure Index (IGF), year-to-date down 10.1%
• SPDR FTSE/Macquarie Global Infrastructure 100 (GII), year-to-date down 5.8%

Telecommunications ETFs on Line One

Few sectors have taken as much of a beating as telecommunications and its related exchange traded funds (ETFs). But is a turnaround in the offing?

Some analysts seem to think so. One for Citigroup upgraded telecom to "overweight," since analysts appear to be done slashing their estimates.

Telecoms have a history of underperforming the markets, reports Dan Burrows for Smart Money. If we are, in fact, at the bottom, says one analyst, telecom could be poised to outperform.

Global telecommunications is undergoing a transformation. India is the fourth largest telecom market in Asia, after China, Japan and South Korea, reports the Centre for Telecom Policy Studies. The quality of service is improving, as well as the overall accessibility.

Telecom ETFs that might be worth a look:

• iShares Dow Jones US Telecom (IYZ), down 19.2% year-to-date
• iShares S&P Global Telecommunications (IXP), down 10.5% year-to-date
• Vanguard Telecom Services (VOX), down 17.1% year-to-date

Leveraged and Short Telecom ETFs Can Maximize Exposure On Both Sides

Year-to-date, the iShares Dow Jones US Telecom (IYZ) and the iShares S&P Global Telecommunications (IXP) exchange traded funds (ETFs) are down 20.8% and 13.7%, respectively. So, it's probably a good time for the new ProShares UltraShort Telecommunications (TLL).

Launched alongside the ultrashort is the ProShares Ultra Telecommunications (LTL), designed to deliver twice the performance of the index. In other words, when the index rises by 1%, the ETF would rise by 2%. Keep in mind, this holds true for the flip side of the equation.

The telecommunications sector is dynamic and volatile at times, but rapidly changing technologies, and the quick spread of wireless communication, along with consumer and internet entertainment, are attracting investment in this sector.

The new ETFs are listed, but trading has not started, according to Trading Markets.

Short and leveraged ETFs can be used in a variety of ways, including:

• Continuing to profit, even in a sector downturn
• To get more bang for your investment buck
• To execute sector rotation strategies
• To easily adjust overall portfolio exposure

As with anything else, caution should be exercised with these types of funds. This magnified potential for gains can just as easily turn and magnify your potential for loss.

Motorola to Split In Two - Technology ETFs Are Mum For Now

Motorola (MOT) announced today that it was going to split itself in two, but so far the impact on technology and networking exchange traded funds (ETFs) doesn't seem apparent.

The company's stock has fallen 45% in the last year, reports the Dealbook in the New York Times, and the breakup doesn't come as a surprise. The plan is to separate the cell phone unit from its broadband and mobility operations. With the news, shares of Motorola were up just a smidge in intraday trading.

Motorola sits in these ETFs:

• iShares Dow Jones US Technology (IYW): Motorola is 1.2%, year-to-date it's down 13%
• iShares S&P GSTI Networking (IGN): Motorola is 4.6%, year-to-date it's down 16.6%
• Vanguard Information Technology (VGT): Motorola is 1.4%, year to date it's down 12.7%

It remains to be seen if Motorola's move will be successful and help it compete against big rivals such as Nokia, Samsung and Apple. If the decision to split was the right one, these ETFs could see some benefit. However, the company isn't in the top five holdings for any of them, so any impact wouldn't be overwhelming.

ETF Tracking Error Is Sometimes a Necessary Evil

Logically, exchange traded funds (ETFs) should have minimal tracking error. That's because they track an index, and in theory, if the index zigs, so does the ETF - and vice versa. It's not always the case, though, and tracking error does occur.

Not All the Good Ideas Are Taken With ETFs

W.P. Thatcher for Stocks For All Seasons has 10 exchange traded funds (ETFs) in mind that he'd like to see come to market.

Long gone are the days of only the plain vanilla fund, so let's see what he has to add. Among his picks are:

• More commodity ETFs. Where are ETFs for pork bellies, cocoa and lumber? Most people aren't sophisticated enough to handle futures trading, but they still need exposure to this asset class. There is the Claymore/Clear Global Timber Index (CUT), but it doesn't track futures.

• Momentum stocks ETF. I don't know how this could be done cheaply due to the constant shifts in buying and selling, but there would be HUGE demand for it.

• An ETF for distressed debt. Let retail investors be vulture investors for a day.

• Real estate ETFs for specific housing markets.  People forget that we have many housing markets.  Not everywhere is tanking.

• A collectibles ETF. This would be very hard to value, so it might have to be in something really liquid like Bordeaux futures or Old Masters.

Late last year, we drew up our own wish list of ETFs. How are things coming along so far?

• State ETFs: Yep! The first state ETF is projected to be Oklahoma's, and it's scheduled to launch in late April. The fund will be made up entirely of stocks issued by the state's publicly traded companies.
• Ireland ETF: Wouldn't it be nice to have one in time for St. Patrick's Day? That would be something worth hoisting a Guinness for. Alas, there's always next year.
• Global Wireless ETF: Nothing doing yet, and there isn't anything in registration.
• Mortgage ETF: The market will turn around someday, but this kind of fund isn't a high priority right now.
• An ETF of ETFs: We've predicted that there will be one to launch this year, but so far, there hasn't been one. Luckily, there are nine months left.
• Dry Shipping ETF: A fund like this could capitalize on increasing globalization, but it has yet to materialize.

Semiconductor ETF Drags On Intel News

Shares of Intel Corp. (INTC) are expecting a lower profit margin which weighed on investor sentiment toward the semiconductor exchange traded fund (ETF). Semiconductor HOLDRs (SMH) fell on Tuesday to $28.13 after hitting an intraday low of $28.09.

It was the fund's lowest point since Feb. 8, reports Wanfeng Zhou for Thomson Financial.

Much of the blame for the drop lies with recent news from Intel, SMH's top holding at 24.2%. The company lowered its outlook based on falling prices in memory chips that are used in all kinds of gadgets, from cell phones to digital cameras.

Dow Jones reports that it's likely just an overreaction. Intel is such a big player in the technology market that any sign of trouble sends shivers through the sector.

PowerShares Launches Its India ETF Today

PowerShares launched its India exchange traded fund (ETF) this morning, and it's trading on the NYSE Arca.

The PowerShares India Portfolio (PIN) will join the WidsomTree India Earnings Fund (EPI) as the two ETFs dedicated to gaining exposure to India, one of the world's fastest-growing emerging markets. PowerShares says it has taken measures to address the country's restrictions on foreign investment.

PIN will hold a basket of 50 Indian stocks that represent the largest companies listed on the two major Indian indexes, the Bombay Stock Exchange and the National Stock Exchange. The fund is allocated primarily in large-cap stocks: 72.2% are large-cap growth and 23.6% are large-cap value. Mid-cap growth is 2%, and mid-cap value makes up 2.3%.

Across the sectors, PIN is most heavily allocated in energy: 25.2%. Financials make up 17.9%, information technology is 14.2% and telecommunication services is 11.4%.

Down The Line With Telecom ETFs

 

Fourth-quarter earnings reports among telecommunication companies found in related exchange traded funds (ETFs) were down as of Thursday.

The Associated Press says that Sprint already warned in January that subscriber numbers were lower than what Wall Street expected.

The telecom sector may be wired for a downward trend. Before you hang up, consider Bush's comments about protecting the phone companies. Could it affect related ETFs?

• iShares Dow Jones US Telecom (IYZ): Down 17.6% year-to-date; among its top holdings are AT&T (T) 22.6%; Sprint (S) 7.1%; Verizon (VZ) 14.6%.
• iShares S&P Global Telecommunications (IXP): Down 10.2% year-to-date; among its top holdings are AT&T 16%; Vodafone GRP (VOD) 12.6%; Telefonica SA (TEF) 9.6%.

IXP contains global exposure to the telecommunications industry, while IYZ focuses on domestic companies.

Cut Cables Aren't Cutting Internet ETFs

Would the Internet exchange traded funds (ETFs) be affected by four undersea cables that are damaged? Undersea cables are carrying around 95% of the world's telephone and Internet traffic, and four of them have been mysteriously cut.

Most industry insiders are ruling out foul play, because if someone was tampering with communications to the Middle East, they would have damaged the other cables still operating, reports Heather Timmons for The New York Times.

These cables are owned by private operators and there are no armies or governments protecting them. Communications in the Middle East are hardest hit, with damage extending to India, the U.S. and Europe. The cutting of three cables, named the Sea Me We 4, the Europe-Asia cable, and the Falcon are going to be investigated and pulled up to rule out sabotage.

Flag Telecom owns the Europe-Asia cable and the Falcon. The company's network is one of the newest in existence, so wear and tear is unlikely at this point.

ETFs that could be affected include the Internet Architecture HOLDRs (IAH), iShares S&P Global Telecommunications (IXP), First Trust Dow Jones Internet Index (FDN) and Internet HOLDRs (HHH). Flag Telecom is not a holding in any of these funds.

Asian Stocks and ETFs Hear The Roar

The Asian indexes officially entered a bear market this week, taking the related exchange traded funds (ETFs) and stocks down.

A recent spread of short positions led to panic sell-offs, possibly because of hedge funds unloading on margin calls, reports Daniel M. Harrison for TheStreet.

The Hang Seng went through the biggest two-day decline since the 1997 Asian contagion, ending down 2061 points, or 8.7% at 21,757. China soon followed the island's movements, going down 354 points, or 7.2% at 4559.  Last Wednesday was the start of the Asian sell-off  when the Hang Seng fell 5.4% in one day, shedding a total of 17.8% in five days.

The sell-off is believed to be a result of short-selling by traders who saw a weakness in key technical support levels last week, and once prices fell below the 23,400 level, hedge funds covered margin calls, causing further declines. Telecom, financials and insurers all slipped to  lows.

Broadband ETF Hits Low

Tuesday was a brutal day for Wall Street and the exchange traded fund (ETF) Broadband HOLDRs (BDH) was given no mercy. The ETF fell to its lowest level in more than four years, weighed down by weal link Motorola Inc. (MOT) as fourth quarter earnings have investors defensive, reports Trading Markets.

The ETF traded at 4.6% down at $12.20 after touching down on a low of $11.60 intraday. This level hasn't been seen since October 2003. Motorola makes up 20.3% of assets in BDH and those fell 10.4% to $11.95.

Motorola's earnings were announced on Wednesday, reports Shira Ovide for Dow Jones Newswires, and the news was about as investors expected. While the company did exceed estimates for its fourth-quarter profits, its also expected to take a loss in the first quarter. The main culprit in the decline is the company's cell phone division, and they're still hunting for new phones that will excite customers.

Country-Specific ETFs Tell Two Stories

If they're smartly played, country-specific exchange traded funds (ETFs) can deliver rewards.

Country-specific ETFs, such as iShares Austria (EWO), give investors a great way to take advantage of growth in regions such as Eastern Europe. Two years ago, we made a small bet on EWO because we liked the exposure to Austria as well as the fast-growing emerging markets elsewhere in the area. We knew this ETF was a gamble because of its highly concentrated two-dozen stocks, making it susceptible to price swings. We watched the ETF jump 28% before selling it in 2006.

After walking through the streets of cities such as Prague with my family last Summer, I took notice of bank branches filled with customers and the numerous ads for cell phones, many of which were offerings from companies in EWO's portfolio.

Advisors are using these country-specific ETFs in a variety of ways, reports Rob Wherry for SmartMoney, from a substitute for individual stock picking to getting boosted returns away from a generic, broad-based ETF. Such strategies can hold the hopes of big returns but they are also carrying different levels of risk, so be sure to do your research.

Consumer Tech Spending Projected to Slow Down, Possibly Hitting ETFs

The ghost of a consumer spending slowdown and a possible dip in related exchange traded funds (ETFs) hovers over the annual Consumer Electronics Show taking place this week in Las Vegas. Visiting a smorgasbord of the latest tech gadgetry when you're strapped for cash sounds like about as much fun as window shopping.

Consumer tech spending is projected to dip to 6% this year, reports Richard Waters of the Financial Times. That's down from 11% in 2007 and 13% in 2006. The silver lining is that the Consumer Electronics Association's estimates have proved to be conservative in past years.

Despite the gloomy news, the consumer tech sector is still expected to fare better than other sectors that rely on consumers and that spending in the sector should really pick up in the second half of the year.

A few of the ETFs that could experience a ripple effect in either direction:

• ProShares UltraShort Consumer Goods (SZK)
• Technology Select Sector SPDR (XLK)
• iShares Dow Jones US Technology (IYW)

Brazil's ETF Could Retain Its Looks Through 2008

Brazil is generally known as the land of really good-looking people, and that tendency toward good looks extends to its exchange traded fund (ETF).

The iShares MSCI Brazil Index (EWZ) was among the top performers for 2007, and Dave Mock for the Motley Fool takes a good look at the fund for investors who might be interested in hitching a ride.

Three sectors make up the top five holdings in the fund: energy (25.1%), industrial materials (22.6%) and financial services (6.1%).

Mock takes a look at some of the top-performing stocks in the fund and uncovers even more burgeoning industries in Brazil that could keep the fund in solid shape. Several wireless stocks have doubled in 2007, and the country's largest cellular service provider in the country is investing heavily in expanding its network. Oil is another area singled out to potentially be a strong performer in the country this year. Petroleo Brasileiro, the fund's number one holding at 13.6%, not only has a monopoly on exploration, refining and production, but it holds extensive rights to oil and gas reserves around the world.

Post-Holiday ETF Dreaming

The holidays are over, and we're already poking around the tree for any missed presents and thinking about what we'd like for next year's helping of exchange traded funds (ETFs).

Matthew Hougan at IndexUniverse drew up his wish list, which consists of:

• A cheaper commodity fund. Expenses are at .75% annually.
• A smarter commodity fund. Straight indexing isn't the way to go with commodities, he says.
• A VIX Volatility Index fund. It would have been the best-performing ETF this year.
• More strategy products. People are ready for some complexity.
• Frontier Market ETFs. Despite the issues regarding liquidity and foreign ownership restrictions, there's room for exposure.

I've been doing some dreaming, too, and here's my list:

• A global wireless ETF. All we've got right now are the Merrill Lynch Wireless HOLDRs (WMH), which cover U.S. wireless and about 50% global. We're going global and seeing more and more emerging markets get in on wireless technology, so where's the ETF for them?
• An Ireland ETF. With millions of Irish Americans (or millions of Americans who just wish they were Irish) and an expanding economy -- when are we going to be able to raise a pint of stout to an ETF representing the Emerald Isle?
• State ETFs. There are currently 21 StateShares for individual states in registration with the SEC. Will they see the light of day in 2008? The market cap for California based companies is greater than some countries - investors might be ready for that kind of investment.
• A mortgage ETF. You just did a double-take, but hear us out: when the real estate market picks up again, the mortgage companies are going to do well -- they typically do when real estate is strong. Sooner or later, we're going to want a mortgage ETF to capitalize.
• An ETF of ETFs. Canada has one. Why not us? We've predicted an ETF of ETFs for 2008, but will it actually happen? One can dream.
• A dry shipping ETF. Global trade is growing by leaps and bounds. Now, how about a fund to capitalize?

Evolving Smartphone Techology Gives Telecom ETFs a Lift

Even though the U.S. seems to be bringing up the rear with telecommunications technology among developed countries, related exchange traded funds (ETFs) don't appear to be suffering. You would think with the launch of the iPhone this year, we'd finally be caught up. But Japan is way ahead of us and using their phones for things that still exist only in our collective imaginations.

How far ahead are they? According to a report on NPR, phones in Japan can broadcast live television, shoot photos with 5 megapixels (most U.S. phones only shoot with 1 or 2 megapixel resolution), be aimed at a restaurant to get instant reviews and they can be used to pay for things like coffee or trips on the subway.

Don't despair. The U.S. is slowly but surely catching up. The launch of the iPhone of the Verizon Voyager (although it has no television capability and its camera is 2 megapixels) certainly haven't hurt. But if Japan's cell phones are any indication, bigger and better things are on the way here. Among the several ways to catch the telecommunications wave, both domestically and abroad:

• Wireless HOLDRs (WMH), up 22.7% year to date. Verizon (VZ) is 9.9% of the fund.
• iShares S&P Global Telecommunications (IXP), up 25.0% year to date. AT&T (T), which partnered with Apple (AAPL) on the iPhone, is 14.7% of the fund. Verizon (VZ) is 7.9%.
• WisdomTree International Communications (DGG), up 26.9% year to date

FCC's New Rules Make ETF One to Watch

Could the Federal Communications Commission's (FCC) ruling on media ownership impact the exchange traded fund (ETF) that tracks the sector?

The two rules approved on Tuesday are that no company can control more than 30% of the market, and newspapers are allowed to buy radio and television stations in the largest cities, reports Stephen Labaton at the New York Times. The first rule puts some regulation into the industry, and the second rule is meant to give a sorely needed boost to the hurting newspaper industry.

The PowerShares Dynamic Media (PBS) ETF could be affected if the changes stick. The fund is down 10% year to date. Among its holdings are Walt Disney, which owns ABC (DIS, 4.8%) and CBS Corp. (CBS, 4.3%).

Not many people seem very happy about the new rules, and they're almost certainly going to be reviewed by courts in the next few months, so stay tuned.

Tech ETFs: 2008 Outlook

One word to describe the tech sector and related exchange traded funds (ETFs) is "fragmented". For much of 2007 the simple investments made into a broad-based technology ETF may have brought double-digit gains, however, nowadays, doubts are emerging in some tech sub-sectors.The Trade Radar Operator for Seeking Alpha pinpoints some of the hot and cold points within this unstable sector.

• IT spending slowing World IT spending will grow at a slower pace in 2008, dependent upon the economic uncertainty and downside risk. Growth is projected at 5.5%-6.0%, down from 6.9% in 2007.
• Telecom spending a bright spot Demand remains strong among telecom companies, as internet traffic has doubled. AT&T (T) is buying Cisco (CSCO) routers, which could just help the tech company.
• Consumer electronics are hot Both Apple (AAPL) and Sony (SNE) are experiencing strong sales during this holiday season not to mention Apple has made gadgets sexy again.
• Semiconductors Overcapacity has been slowing down certain types of chip makers, squeezing margins of makers. Until this overcapacity is absorbed it will continue to weaken demand and impact sales.

The strength in tech is not across the board. However, consumer electronics and telecom suppliers should continue to do well, while semiconductors may struggle. Just approach tech in 2008 with some knowledge.

• Technology Select Sector SPDR (XLK) is up 15.8% year-to-date
• iShares S&P GSTI Semiconductor (IGW) is down 0.5% year-to-date
• Vanguard Telecom Services ETF (VOX) is up 5.2% year-to-date
• PowerShares QQQ (QQQQ) is up 19.3% year-to-date

Is China 3G Plan Boost for China ETFs?

The latest market reaction in China points to the fact that Beijing may be close to unveiling plans for the 3G wireless service, helping to boost stocks and exchange traded funds (ETFs). Shares of China's state-controlled but Hong Kong-listed fixed-line telecom companies rose on early this week in response that the government may grant mobile licenses soon, reports Mure Dickie for Financial Times.

The news has been met with a lot of excitement. Speculation concerning 3G has been a long-discussed topic because the remodeling would reduce the number of big operators from four to three. The two biggest contenders are China Telecom and China Netcom, already the two major fixed-line operators. China Telecom shares rose 4.6% to close at HK$5.45 ($0.70). China Netcom closed 5.5% to HK$21.15 ($2.72). China-focused ETFs may experience the surge down the line:

• iShares FTSE/Xinhua China 25 Index (FXI)
• SPDR S&P China (GXC),
• PowerShares Golden Dragon Halter (PGJ)
• iShares MSCI Hong Kong Index (EWH)

International Telecommunication ETF Ringing Off The Hook

Global telecommunication stocks and exchange traded funds (ETFs) have fared well this year. The international-focused ETF iShares S&P Global Telecommunications Fund (IXP) has done superbly compared with some of its domestic counterparts.  IXP is up 25.9% year-to-date, while iShares Dow Jones U.S. Telecom (IYZ) is up 2.5%. IXP invests in stocks from dozens of countries, keeping around 70% of assets foreign, reports Don Dion for Seeking Alpha. Whether IXP will continue its rally is up to its two largest holdings, Vodafone (VOD) and AT&T (T). Together, they make up around 28% of the fund's assets. Consider that this ETF offers growth, invests in shares of large companies with good cash flows and doesn't move in step with the U.S. economy.

Two Telecommunication ETFs That Are So Similar but So Different

It's interesting to see how different two exchange traded funds (ETFs) that cover the same sector, one domestically and one internationally, can perform. A strong example of this is shown in the telecommunications arena. The U.S-based iShares Dow Jones U.S. Telecommunications Fund (IYZ) has been in a bit of a funk over the last six months, as its returns have been negligible, as Gary Gordon for ETF Expert says.

However, during the same time, the iShares S&P Global Telecommunications Fund (IXP) increased 20%. Both IYZ and IXP have AT&T (T) and Verizon (VZ) in their top holdings. AT&T makes up 16.9% of IYZ, and Verizon makes up 13.8%. In IXP, AT&T holds 15.6%, and Verizon holds 8.3%. Year-to-date, IYZ is up 11.6%, and IXP is up 31.2%. So what does the global IXP have that U.S. (IYZ) doesn't?

For one, IXP has more diversification. It diversifies across the biggest names in the world, including England's Vodafone, Spain's Telefonica, Mexico's America Movil and China's China Mobile. IXP has benefited from exposure to emerging market countries China and Latin America whose telecommunications companies have been very successful. On the other hand, U.S.-based IYZ has more exposure to the ailing Sprint Nextel (S) and sliding Qwest Communications (Q).

For those investors interested in other international telecommunications ETFs, there's also the WisdomTree International Communications (DGG). Currently, it's up 33.9% year-to-date and has a 4.3% yield.

Telecommunication ETFs on the Line

Banking stocks have been on many investors' minds lately, so it is likely that telecommunication stocks and the exchange traded funds (ETFs) that hold them have been on the back burner. Both the telecommunications and the mobile phone sub-sector have fared well, with stocks ringing to the upside. Haven't you noticed that everyone is on the phone these days?

Michael Kahn for Barron's says that conditions for the leading stocks within the telecommunications and wireless providers, such as Verizon (VZ) and AT&T (T), are ripe, especially with the iPhone's popularity. Some ETFs that hold telecommunications stocks and their performance year-to-date are:

• Merill Lynch Wireless HOLDRs (WMH) - up 22.7%
• Merill Lynch Telecom HOLDRs (TTH) -  up 16.7%
• iShares Dow Jones U.S. Telecommunications (IYZ) - up 14.5%
• Vanguard Telecommunication Services ETF (VOX) - up 12.4%

Stylish Phones Keep Up Telecommunications ETF

The iShares S&P Global Telecommunications (IXP) exchange traded fund (ETF) has weathered volatile market storms better than many other ETFs, thanks to its trendy phones. It hasn't dropped below its long-term trend line all year and is up 15.9% year-to-date.

It's largest holding, AT&T (T) at 16.7%, has had an excellent year thanks to its partnership with Apple (AAPL) on the launch of its popular iPhone. The iPhone is about to debut in the U.K., but this time Apple will partner with O2, a subsidiary of Spain's Telefonica, according to Daniel Del'Re for TheStreet.com. Telefonica is the third largest holding in IXP at 8.3%. If the iPhone's success here in the U.S. is any indication of performance, Telefonica and IXP could see an increase correlated to the U.K launch.

IXP's third largest holding, Verizon (VZ) at 8.2%, also has had an impressive year. The company says it has sold more than 3.4 million Chocolate by LG phones since its launch last summer, according to Steve Goldstein for MarketWatch.

All the Extra Talking Could be Boosting Telecommunication ETFs

Telecommunication exchange traded funds (ETFs) are trending upward lately. One factor in the increase could be that the demand for mobile phones has skyrocketed in heavily-populated countries such as India and China. In fact, cell phone maker Nokia just declared it expects India to overtake the U.S. as its second biggest sales market after China by 2010, BBC News reports.

Nokia (NOK) also just announced that it has created an online music service intended to compete with Apple's (AAPL) iTunes, says Carl Delfeld for ETF XRAY. Nokia also happens to be the seventh largest holding in the WisdomTree International Communications ETF (DGG) at 4.1%. DGG is up 8.9% year-to-date. Similarly, other telecommunication ETFs are up year-to-date:

• iShares Dow Jones U.S. Telecom (IYZ) - up 10.3%
• iShares S&P Global Telecommunications (IXP) - up 10.7%
• PowerShares Dynamic Telecom & Wireless (PTE) - up 5.7%

Telecom ETFs - It Was a Prank Caller!

The telecom exchange traded funds (ETFs) were ringing but nobody was there! Rumors that Vodafone (VOD), the world's largest wireless-network firm, wanted to buy Verizon Communications (VZ) for $160 billion were deemed false says Trang Ho for Investor's Business Daily. The news helped lift telecom ETFs to new highs, which have returned double-digit gains this year. Some of the telecom ETFs include:

• Telecom HOLDRs (TTH) - up 14.5% year-to-date and VZ makes up 22%
• Wireless HOLDRs (WMH) - up 19.5%, while VZ makes up 10% of the ETF
• Vanguard Telecommunication Services (VOX) - up 15.5% with 18% in VZ
• PowerShares Dynamic Telecommunications and Wireless (PTE) - up 12.8% and holds 5% VZ
• WisdomTree International Communications (DGG) - up 16.2%; no VZ, but 15.5% VOD
• iShares S&P Global Telecommunications (IXP) - up 16.4% with 8% VZ and 12% VOD
• iShares DJ U.S. Telecom (IYZ) - up 19.3% with 14.3% in VZ

America Rocks: Blatant Self-Promotion for U.S. ETFs

While it's true we promote many promising international exchange traded funds (ETFs), we want to take a minute to recognize some of our own country's outstanding ETFs.

• Internet Architecture HOLDRs (IAH) - up 45% over the past year
• Vanguard Telecom Services ETF (VOX) - up 38%
• iShares Dow Jones U.S. Aerospace and Defense (ITA) - up 37%
• iShares Dow Jones U.S. Telecom (IYZ) - up 37%
• SPDRs (SPY) - up 22%
• Diamonds Trust (DIA) - up 24%

Sometimes we get so carried away with exciting foreign investment opportunities that we forget to reflect on the factors that make America's markets so prosperous. For example, America accounts for about 23% of the world GDP, and from 2003-2006, the U.S. GDP was larger than twice what China has generated in its entire history, according to Carl Delfeld of ETF XRAY. California's GDP is double India's. America has the deepest, most liquid capital markets. The NYSE-listed companies have a combined value of $15 trillion, which is three times that of Japan, its closest rival. Of the current Fortune 500 companies, 75% of them were nonexistent in 1980. This shows America's dynamic and prosperous business opportunities among industrialized nations. All this and so much more makes us "proud to be an American."

Hello! Telecom ETFs Ringing

Telecom companies are asking exchange traded funds (ETFs), "can you hear me know?"  Big European telecom companies are moving on news of mergers and higher dividend payments reports Trang Ho of Investor's Business Daily.  This news can have some affect on U.S. listed ETFs.

WisdomTree International Communications Index (DGG) holds companies from 20 different countries, with the U.K. and France holding the top spots.  The largest holdings are Vodafone (VOD) at 9.6% and France Telecom (FTE) at 9.4%.  DGG is up 11% year-to-date.  Also ringing is iShares S&P Global Telecom (IXP) up 12% year-to-date. It is 35% U.S. and 65% foreign.  The U.K. and Spain represent the top two largest foreign exposure.  AT&T (T) makes up 18% of the ETF followed by Vodafone at 10.3%.

Telecom ETF On Global Frontier

International telecommunication firms are in a good position to benefit from the fast growth of emerging markets, as are many investors. The exchange traded fund (ETF) WisdomTree International Communications Sector Fund (DGG) tracks its namesake index and invests in advertising, internet, media and telecom dividend-paying companies outside the U.S. and Canada, reports Marie Bereens of Investor's Business Daily. With a dividend yield of 4.5%, it has returned 16% since its launch in October.

The good thing about ETFs is they're continuing to grow, and they're covering more and more sectors, so they're slicing the pie into smaller and smaller pieces.  There really isn't another international communications or telecommunications ETF out there, so they(DGG) own the space. While domestic growth of these megacaps will be mediocre at best, these companies face great opportunities by setting up shop in Eastern Europe.  We're in a situation where especially in emerging markets countries- Eastern Europe, Latin America, Asia- you're seeing more and more demand from a telecommunications standpoint. With less than 30% of the Chinese population owning cell phones, there is still plenty of room for growth.

iPhone Introduced-How Will ETFs React?

Telecom ETFs (exchange traded funds)- look out! Apple Computers just got a new name, Apple Inc. and is branching out into the mobile phone industry. Rachel Conrad of the Associated Press reports the new phone, iPhone, will be released in June, starting at $499, and will run through the Macintosh operating system. The phone will play music, surf the internet and run through the Mac system, all controlled by touch. Apple expects to sell 10 million phones in 2008. 

What ETFs could possibly be touched by this?  Select Sector Technology SPDR (XLK) has 3.2% of Apple (AAPL).  Not that Apple is in the telecom sector now, but with the new iPhone, who knows - Telecom ETFs include iShares Dow Jones US Telecom (IYZ) and iShares S&P Global Telecommunications (IXP).

Telecom Mergers and Acquisitions Affect ETFs

Now that the American market in telecommunications has almost reached its saturation point, there are mergers and acquisitions about to take place that will effect telecom exchange traded funds (ETFs). As of Friday, AT&T (T)closed the purchase of its $86 billion deal with Bell South Corp. in an effort to widen their U.S. phone and Internet services. Julie Vorman of Reuters reported that AT&T is also attempting to break into television now that traditional phone services have thinned.

Verizon Communications Inc. (VZ) is seeking to buy a stake in India's fourth largest mobile phone operator, Hutchison Essar Ltd. SmartMoney stated that other contenders for Hutchison Essar include Vodaphone Group PLC. and India's own Reliance Communications Ltd.

Look for the ETF iShares Dow Jones U.S. Telecom (IYZ) to make the most of these events. Top holdings include AT&T with 23% and Verizon with 19%.

Telecom ETFs Ringing Higher

One area that has been moving lately is the telecommunication sector.  There are several exchange traded funds (ETFs) that cover this sector.  Forbes looks at Vanguard Telecom Services (VOX).  The ETF holds companies that include communication services through fixed-line, cellular, wireless, high bandwidth or fiber-optic cable networks. 

VOX is up 31% year-to-date and up 17% over the last three months.  Top holdings include AT&T (T), Verizon Communications (VZ), BellSouth (BLS), Sprint Nextel (S), and Alltel (AT).

Telecom ETFs Boosted

Telecom companies boosted the exchange traded fund, Telecom HOLDRs (TTH) today.  AT&T (T) and BellSouth (BLS) are top holdings in the ETF, and both companies reported solid quarterly earnings.  The companies were up 5% for the day, and the ETF, 2.6%.

iShares Dow Jones U.S. Telecom (IYZ) was up today as well, but not as much.  Although the ETF holds AT&T and BellSouth, they hold a smaller percentage than TTH.  IYZ holds 18% of AT&T versus 28% in TTH and 5% of BellSouth versus 18%.

ETF Trends - Providing Telecom Services (VOX)

During the last two months of the market volatility, telecommunication services have done well.  Vanguard Telecom Services (VOX) exchange traded fund is up 1.15% for the month versus the S&P 500's 0.3%.  The ETF is also up 13% year-to-date. 

The largest holding in the ETF is AT&T (T), which has been performing well, based on its aggressive move into providing television service into homes.  There are a few proposals in Congress that would be a positive affect on telecom services.  One would give more control over Internet connection and another would help reach rural areas of the country.

ETFs and NSA Phone Records

Verizon (VZ) and BellSouth (BLS) are two of the top holdings in the exchange traded fund iShares Dow Jones U.S. Telecom (IYZ).  These two companies deny allegations made in a USA Today article, that they turned phone records over to the National Security Agency nor were they asked to provide information.  AT&T (T), another top holding in the ETF, is the sole company named in the article not to deny the allegations.

The news along with consumer lawsuits has had some affect on IYZ.

Telecom ETFs Gets Boost From AT&T Deal

AT&T Inc. expects huge cost savings after its $67 billion acquisition of BellSouth Corp. Wall St. experts feel this may be just the start of a revival of telecommunications stocks.

Three exchange traded funds focusing on telecom stocks are enjoying the positive news and are some of the best performing ETFs during the last 30 days. They are, Vanguard Telecom Services VIPERs (VOX), Telecom HOLDRs (TTH) and iShares Dow Jones US Telecom (IYZ).

AT&T executives said the deal would be worth $89.4 billion -- the $67.1 billion in AT&T stock being swapped for BellSouth stock, and $22.3 billion of debt being assumed by AT&T. BellSouth's own net debt is $16.8 billion, and the portion of Cingular's debt attributable to BellSouth is $5.5 billion.

AT&T said about 77 percent of its expected $18 billion net savings would be from reduced operating expenses. Work force cuts would represent about 50 percent of these reduced expenses.