The iShares Dow Jones US Telecom ETF (NYSEArca: IYZ) is up 16.9% so far this year compared with a 9.6% advance for the S&P 500 as the market-beating sector tries to break out to new highs.

The telecom ETF has been outperforming since the end of April, notes Investors Intelligence technical analyst Tarquin Coe.

“That relative trend versus the S&P 500 is rallying again today and in doing so reasserting that five month move. Further outperformance is expected, with new price highs for 2012 likely over the next few weeks. Before the year-end a test of the 2011 high of $25.89 is expected,” he said in a newsletter Wednesday.

IYZ holds $625.2 million in assets and charges and expense ratio of 0.47%.

“Coupled to the rising trend, the fund is also somewhat defensive and currently yields 2.78%, putting grins on the faces of both momentum players and investors alike,” Coe wrote.