Investors’ preference for defensive, low beta sectors this year is lifting telecommunications stocks and the corresponding exchange traded funds, such as the Vanguard Telecommunication Services ETF (NYSEArca: VOX) and the iShares U.S. Telecommunications ETF (NYSEArca: IYZ).
Although speculation is intensifying that the Federal Reserve is nearing its first interest rate increase of 2016, perhaps as soon as later this month or in July, VOX has been durable. VOX, one of the largest and least expensive telecom ETFs, is higher by 9.1% year-to-date.
Telecommunications ETFs like IYZ are also benefiting from the Federal Reserve backing off of raising interest rates this year, an important factor because telecommunications is one of the most rate-sensitive sectors.
International telecom stocks and exchange traded funds represent an option for yield-starved investors that are also looking to reduce their exposure to rising U.S. Treasury yields. That theme can be accessed with the iShares Global Telecomm ETF (NYSEArca: IXP).[related_stories]